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Essay / Research Paper Abstract
This 8 page paper looks at tax breaks given to the clergy. Differences in how self-employment income and W-2 income are treated as well as the parsonage allowance, are all explored. Bibliography lists 6 sources.
Page Count:
8 pages (~225 words per page)
File: RT13_SA246tax.rtf
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Unformatted sample text from the term paper:
"write things off." If they are self-employed, there are certain benefits and if they earn very little, there are tax breaks such as the Earned Income Credit that allows people
to get money back from the government that they have not even paid in. Although the standard 1040 and its schedules includes a great many variations, there are special
provisions for clergy. Everyone has heard that churches and their leaders get tax breaks, and while they do, it is a hot topic right now as the concept of the
parsonage allowance may soon be a thing of the past. In examining the parsonage allowance as it stands, and how the income of clergy is treated, one should also
note that there are differences in income taxation and social security taxation for clergy who are either considered employees or self-employed individuals. Because members of the clergy are
not usually highly compensated, the parsonage allowance allows them a significant tax benefit (Taber, 1995). While people look up to the clergy and the government attempts to give them a
break, there are intricate rules and regulations that clerics must follow and they are similar to what everyone else must do. IRC Sec. 107 allows the clergy to
take what is called a parsonage allowance, which is an amount that is excluded from their gross income (Taber, 1995). In respect to the social security tax, they are generally
treated as self-employed for the services that they perform when it comes to their duties the perform in respect to the ministry (1995). This includes the parsonage allowance and so,
Social Security and Medicare taxes are usually not withheld by the employer (1995). However, there are rules that must be followed. Also, clerics are eligible for the parsonage allowance. The
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