Two questions typically arise from pastors at tax time: Who can I use to prepare my taxes? Who understands ministers’ taxes? These are good questions, because not every CPA or accounting firm is familiar with ministers’ pay and taxation or the unique status of ministers.
If you are a pastor, here are a few tips for finding the right tax professional.
- If possible, hire a CPA or tax attorney. These professionals have completed a rigorous educational program, have passed a difficult qualifying examination, and are subject to a comprehensive body of professional ethics.
- To find a reliable tax preparer, learn names and find out information from other ministers in your community who have their tax returns prepared by professionals. Who do they use? Are the pastors pleased? What is the cost?
- Call CPAs and tax attorneys directly. Ask if they prepare ministers’ tax returns and, if so, how many they prepare. Consider asking these questions as well:
- For Social Security purposes, are ministers employees or self-employed? (Answer: Ministers are always self-employed for Social Security purposes, with respect to their ministerial income.)
- Can I claim my housing allowance exclusion in computing my self-employment taxes? (Answer: No.)
- If I report my church wages as an employee, are my wages subject to FICA taxes? (Answer: No. Never.)
Anyone with experience in handling ministers’ tax returns should be able to answer these three questions easily and knowledgeably.
Please contact Michael Nolan for church helps and consultation.