Publication 517 - Social Security and Other Information for Members of the Clergy & Religious Workers

Publication 517

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These worksheets are provided to help you figure your taxable ministerial income, your allowable deductions, and your net self-employment income.

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Worksheet 1. Figuring the Percentage of Tax-Free Income

Note. For each line, enter the appropriate amount in all boxes that are not shaded.

	Source of Income		(a) Taxable	(b) Tax-free	(c) Total
1	W-2 salary as a minister (from box 1 of Form W-2)	1
2	Gross income from weddings, baptisms, writing, lecturing, etc. (from line 1 of Schedule C or C-EZ)	2
Note. Complete either lines 3a–3e or lines 4a–4i.
• If your church provides you with a parsonage, complete lines 3a–3e.
• If, instead of providing a parsonage, your church provides you with a rental or parsonage allowance, complete lines 4a–4i.
3a	FRV* of parsonage provided by church	3a
b	Utility allowance, if any	3b
c	Actual expenses for utilities	3c
d	Enter the smaller of line 3b or 3c	3d
e	Excess utility allowance (subtract line 3d from line 3b)	3e
4a	Parsonage or rental allowance	4a
b	Utility allowance, if separate	4b
c	Total allowance (add lines 4a and 4b)	4c
d	Actual expenses for parsonage	4d
e	Actual expenses for utilities	4e
f	Total actual expenses for parsonage and utilities (add lines 4d and 4e)	4f
g	FRV* of home, plus the cost of utilities	4g
h	Enter the smaller of line 4c, 4f, or 4g	4h
i	Excess allowance (subtract line 4h from line 4c)	4i
5	Ministerial income (for columns (a), (b), and (c), add lines 1 through 4i)	5
6	Percentage of tax-free income: Total tax-free income (line 5(b)) $ Total income (line 5(c)) $			=	%**

* FRV (Fair Rental Value): As determined objectively and between unrelated parties, what it would cost to rent a comparable home (including furnishings) in a similar location.

** This percentage of your ministerial expenses will not be deductible. Use Worksheets 2 and 3 to figure your allowable deductions.

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Worksheet 2. Figuring the Allowable Deduction for Schedule C or C-EZ Expenses

1	Percentage of expenses that are nondeductible (from Worksheet 1, line 6): %
2	Business use of car for entire year: miles x 55.5 cents ($0.555).	2
3	Meals and entertainment: $ × 50% (.50)	3
4	Other expenses (list item and amount)
a		4a
b		4b
c		4c
d		4d
e		4e
f	Total other expenses (add lines 4a through 4e)	4f
5	Total Schedule C or C-EZ expenses (add lines 2, 3, and 4f)	5
6	Nondeductible part of Schedule C or C-EZ expenses (multiply line 5 by the percent in line 1)	6
7	Deduction allowed.* Subtract line 6 from line 5. Enter the result here and on Schedule C, line 27a, or Schedule C-EZ, line 2.	7

* None of the other deductions claimed in this return are allocable to tax-free income.

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Worksheet 3. Figuring the Allowable Deduction for Form 2106 or 2106-EZ Expenses

			Column A	Column B
1	Percentage of expenses that are nondeductible (from Worksheet 1, line 6): %
2	Use of car for church business for entire year: miles x 55.5 cents ($0.555).	2
3	Meals and entertainment	3
4	Other expenses (list item and amount)
a		4a
b		4b
c		4c
d		4d
e		4e
5	Total expenses. In Column A, add lines 2 and 4a through 4e and enter the result. In Column B, enter the amount from line 3.	5
6	Enter reimbursements received for other expenses (Column A) and meals and entertainment (Column B) that were not included in box 1 of Form W-2	6
7	Total Form 2106 or 2106-EZ unreimbursed expenses (subtract line 6 from line 5)	7
8	In Column A, enter the amount from line 7. In Column B, multiply line 7 by 50% (.50)	8
9	Add the amounts on line 8 of both columns and enter the total here	9
10	Nondeductible part of Form 2106 or 2106-EZ expenses (multiply line 9 by the percent in line 1)	10
11	Ministerial employee business expense deduction allowed.* Subtract line 10 from line 9. Enter the result here and on Form 2106, line 10, or Form 2106-EZ, line 6.	11

* None of the other deductions claimed in this return are allocable to tax-free income.

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Worksheet 4. Figuring Net Self-Employment Income for Schedule SE (Form 1040)

1	W-2 salary as a minister (from box 1 of Form W-2)	1
2	Net profit from Schedule C, line 31, or Schedule C-EZ, line 3	2
3a	Parsonage or rental allowance (from Worksheet 1, line 3a or 4a)	3a
b	Utility allowance (from Worksheet 1, line 3b or 4b)	3b
c	Total allowance (add lines 3a and 3b)	3c
4	Add lines 1, 2, and 3c	4
5	Schedule C or C-EZ expenses allocable to tax-free income (from Worksheet 2, line 6)	5
6	Total unreimbursed employee business expenses after the 50% reduction for meals and entertainment (from Worksheet 3, line 9)	6
7	Total business expenses not deducted in lines 1 and 2 above (add lines 5 and 6)	7
8	Net self-employment income. Subtract line 7 from line 4. Enter here and on Schedule SE, Section A, line 2, or Section B, line 2.	8

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Worksheets(p24)