1
Reverend Nixon’s only income is his salary as a full-time minister at All Faith’s Church. In the course of his ministerial duties last year, Rev. Nixon incurred unreimbursed expenses of $4,000. On what schedule will Rev. Nixon claim these expenses?
XXSchedule A
Schedule C
Schedule SE
Schedule R
2
Which form do clergy members need to file with the IRS to request exemption from SE tax?
Form 4631
XXForm 4361
Clergy Income Statement
Form 517
3
Reverend John receives an annual salary of $29,000 as a full-time minister and is not exempt from SE tax. This includes $3,000 designated as a rental allowance to pay utilities. His church provides him a parsonage with a fair rental allowance of $7,000 per year. How much must Rev. John include when figuring net earnings for SE tax?
$33,000
$34,000
>> $36,000
$39,000
4
Annette is an ordained minister working for Blessed Church. Her earnings for services performed for Blessed Church are considered:
Wage income.
Tax-exempt income
>> Self-employment income.
Unearned income.
5
Reverend Isaiah receives an annual salary of $16,000 as a full-time minister. This includes $4,000 designated as rental allowance to pay utilities. Rev. Isaiah is not exempt from SE tax. How much must he include when figuring net income for SE tax?
$4,000
$12,000
>> $16,000
$20,000
6
Reverend Saunders incurred $2,100 expenses in the course of his ministry in 2011, all of which were reimbursed under an accountable plan by his employing church. How much of the expenses can Rev. Saunders deduct on his 2011 tax return?
XX$0
$1,050
$2,058
$2,100
7
Father Sheets received $40,000 in ministerial earnings; $28,000 salary for ministerial services, $2,000 for performing weddings, and $10,000 tax-free parsonage allowance. Father Sheets incurred $5,000 of unreimbursed expenses connected with his ministerial earnings – $4,500 related to his ministerial salary and $500 related to the weddings performed as self-employed. How much of the expense related to his self-employed earnings is deductible when figuring net income for income tax after allocation to the tax- free parsonage allowance?
$5,000
$500
XX$375
$125
8
How are clergy housing allowances and the fair rental value of provided housing treated for tax purposes?
For all clergy, the amounts are excluded from gross income for both SE and income taxes.
For active clergy, the amounts are included in gross income for SE and income taxes.
For all clergy, the amounts are excluded for SE tax, but included for income tax.
XXFor active clergy, the amounts are included in gross income for SE tax, but excluded for income tax.
9
Reverend Moran received a salary of $42,000 in 2012 as a full-time minister. On January 1, 2013, his church designated $12,000 of his 2012 salary as a parsonage allowance. How much of Rev. Moran’s 2012 salary is included in gross income for income tax?
$30,000
$36,000
>> $42,000
$54,000
10,
Reverend Smith receives a rental allowance from her employing church. The allowance is excluded from income. She also has unreimbursed expenses from operating her ministry. Which of the following statements is most accurate?
>> Reverend Smith must allocate part of the expenses to the excluded allowance.
The excluded allowance covers the expenses. Nothing is deductible.
The expenses can be claimed as an adjustment to income.
Reverend Smith does not need to claim any of her income.
11
Father Sheets received $40,000 in ministerial earnings; $28,000 salary for ministerial services, $2,000 for performing weddings, and $10,000 excluded parsonage allowance. Father Sheets incurred $5,000 of unreimbursed expenses connected with his ministerial earnings – $4,500 related to his ministerial salary and $500 related to the weddings performed as self-employed. How much of the expense related to his ministerial wage earnings will be deductible when figuring net income for income tax after allocation to the excluded parsonage allowance?
$5,000
XX$3,375
$4,500
$1,125
12
A member of a recognized religious sect should file which IRS form to request exemption from SE tax?
Form 1040
XXForm 4029
Form 4361
Form 4562
13
Matthew is an ordained minister. His church provides him a housing allowance, all of which Matthew spends to rent his home and pay his utilities. Matthew can:
XXExclude the housing allowance from net earnings for income tax.
Exclude the housing allowance from net earnings for SE tax.
Exclude the housing allowance from net earnings for all tax.
Exclude the portion of the allowance spent on utilities from net earnings for SE tax.
14
Income from what services can be exempted from SE tax?
All services performed for income by a minister.
Only services performed by a minister at a part-time job outside the church.
XXOnly qualified services performed by a minister.
Only interest income.
15
Shirley is a member of a religious order. She has not taken a vow of poverty and does not have an approved exemption from the IRS. Her earnings for qualified services are:
Subject to no tax because Shirley works for a 501(c)(3) organization.
XXSubject to SE tax.
Subject to FICA tax.
Subject only to income tax.
16
Kendra is an ordained minister; she has an approved exemption from the IRS. In addition to her duties at her church, Kendra works for wages as an umpire for a local slow pitch softball league. Her earnings from the league are:
>> Subject to FICA.
Subject to SE tax.
Subject to no tax. She has an approved exemption from the IRS.
Subject only to income tax.
17
Which group of taxpayers with earnings from qualified services are automatically exempt from SE tax?
Clergy
Ministers
Christian Science Practitioners
XXMembers of a religious order who have taken a vow of poverty.
18,
Like all self-employed taxpayers, self-employed clergy can deduct amounts paid for:
Medical and dental insurance and qualified long-term care for themselves only, and not for spouse or dependents.
Medical and dental insurance and qualified long-term care for themselves and spouse only, and not for dependents.
XXMedical and dental insurance and qualified long-term care for themselves and spouse, and their dependents.
Medical and dental insurance and qualified long-term care expenses are not deductible for clergy.
19
What additional tax return preparation is needed if clergy receive a housing allowance as part of their compensation and have unreimbursed employee ministerial expenses?
The Clergy Member Income Statement must be completed to allocate expenses between Schedule C and Form 2106 .
The expenses must be allocated to self-employment income and deducted on Schedule C.
>> Expenses allocable to excluded income must be figured to determine the nondeductible amount.
The expenses must be allocated between gross income and self-employment income to determine the deductible amount.
20
After approval of Form 4361, how long is a minister exempt from SE tax on earnings from qualified services?
Three years from the date of the approval.
XXForever. The decision is irrevocable.
Five years from the date of the approval.
Until the minister wants to reverse the exemption.
21
Luke is an ordained minister. Luke’s salary from his employing church last year was $31,000. The church did not designate any of his salary as housing allowance. Luke spent $10,000 to rent his home last year. How much of Luke’s salary must be included when figuring net income for SE tax?
$21,000
XX$31,000
$41,000
$51,000
22
Why is it important to know what qualified services are?
The wages of clergy who perform qualified services are not included in gross income.
XXEarnings from qualified services are subject to SE tax, unless the clergy has an exemption.
Earnings from qualified services are automatically exempt from SE tax.
Clergy who perform qualifed services pay social security and medicare taxes under FICA.
23
Reverend Helscher incurred $1,300 of expenses while performing wedding ceremonies as self-employed last year. On what schedule will Rev. Helscher claim these expenses?
Schedule SE
Schedule A
XXSchedule C
Schedule R