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Irs Forms 1040

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Irs Forms 1040

Irs forms 1040 Publication 517 - Main Content Table of Contents Social Security CoverageCoverage of Members of the Clergy Coverage of Religious Workers (Church Employees) U. Irs forms 1040 S. Irs forms 1040 Citizens and Resident and Nonresident Aliens Ministerial ServicesMinisters Members of Religious Orders Christian Science Practitioners and Readers Exemption From Self-Employment (SE) TaxMembers of the Clergy Members of Recognized Religious Sects Self-Employment Tax: Figuring Net EarningsRegular Method Nonfarm Optional Method Income Tax: Income and ExpensesIncome Items Expense Items Income Tax Withholding and Estimated Tax Filing Your Return Retirement Savings ArrangementsDeducting contributions to tax-sheltered annuity plans. Irs forms 1040 Full-time student. Irs forms 1040 Adjusted gross income. Irs forms 1040 More information. Irs forms 1040 Earned Income Credit Comprehensive ExampleForm W-2 From Church Form W-2 From College Schedule C-EZ (Form 1040) Form 2106-EZ Schedule A (Form 1040) Schedule SE (Form 1040) Form 1040 Attachment 1 Attachment 2 How To Get Tax HelpLow Income Taxpayer Clinics Social Security Coverage This section gives information about which system (SECA or FICA) is used to collect social security and Medicare taxes from members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees). Irs forms 1040 Coverage of Members of the Clergy The services you perform in the exercise of your ministry, of the duties required by your religious order, or of your profession as a Christian Science practitioner or reader are covered by social security and Medicare under SECA. Irs forms 1040 Your earnings for these ministerial services (defined later) are subject to self-employment (SE) tax unless one of the following applies. Irs forms 1040 You are a member of a religious order who has taken a vow of poverty. Irs forms 1040 You ask the Internal Revenue Service (IRS) for an exemption from SE tax for your services and the IRS approves your request. Irs forms 1040 See Exemption From Self-Employment (SE) Tax , later. Irs forms 1040 You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country. Irs forms 1040 For more information, see Bilateral Social Security (Totalization) Agreements in Publication 54. Irs forms 1040 Your earnings that are not from ministerial services may be subject to social security tax under FICA or SECA according to the rules that apply to taxpayers in general. Irs forms 1040 See Ministerial Services , later. Irs forms 1040 Ministers If you are a minister of a church, your earnings for the services you perform in your capacity as a minister are subject to SE tax, even if you perform these services as an employee of that church. Irs forms 1040 However, you can request that the IRS grant you an exemption, as discussed under Exemption From Self-Employment (SE) Tax , later. Irs forms 1040 For the specific services covered, see Ministerial Services , later. Irs forms 1040 Ministers defined. Irs forms 1040   Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Irs forms 1040 Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. Irs forms 1040   If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes. Irs forms 1040 Employment status for other tax purposes. Irs forms 1040   Even though all of your income from performing ministerial services is subject to self-employment tax for social security tax purposes, you may be an employee for income tax or retirement plan purposes in performing those same services. Irs forms 1040 For income tax or retirement plan purposes, your income earned as an employee will be considered wages. Irs forms 1040 Common-law employee. Irs forms 1040   Under common-law rules, you are considered either an employee or a self-employed person. Irs forms 1040 Generally, you are an employee if you perform services for someone who has the legal right to control both what you do and how you do it, even if you have considerable discretion and freedom of action. Irs forms 1040 For more information about the common-law rules, see Publication 15-A, Employer's Supplemental Tax Guide. Irs forms 1040   If a congregation employs you and pays you a salary, you are generally a common-law employee and income from the exercise of your ministry is wages for income tax purposes. Irs forms 1040 However, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services, are not wages; such amounts are self-employment income for both income tax purposes and social security tax purposes. Irs forms 1040 Example. Irs forms 1040 A church hires and pays you a salary to perform ministerial services subject to its control. Irs forms 1040 Under the common-law rules, you are an employee of the church while performing those services. Irs forms 1040 Form SS-8. Irs forms 1040   If you are not certain whether you are an employee or a self-employed person, you can get a determination from the IRS by filing Form SS-8. Irs forms 1040 Members of Religious Orders If you are a member of a religious order who has not taken a vow of poverty, your earnings for ministerial services you perform as a member of the order are subject to SE tax. Irs forms 1040 See Ministerial Services , later. Irs forms 1040 However, you can request that the IRS grant you an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Irs forms 1040 Vow of poverty. Irs forms 1040   If you are a member of a religious order and have taken a vow of poverty, you are already exempt from paying SE tax on your earnings for ministerial services you perform as an agent of your church or its agencies. Irs forms 1040 You do not need to request a separate exemption. Irs forms 1040 For income tax purposes, the earnings are tax free to you. Irs forms 1040 Your earnings are considered the income of the religious order. Irs forms 1040 Services covered under FICA at the election of the order. Irs forms 1040   However, even if you have taken a vow of poverty, the services you perform for your church or its agencies may be covered under social security. Irs forms 1040 Your services are covered if your order, or an autonomous subdivision of the order, elects social security coverage for its current and future vow-of-poverty members. Irs forms 1040   The order or subdivision elects coverage by filing Form SS-16. Irs forms 1040 The election may cover certain vow-of-poverty members for a retroactive period of up to 20 calendar quarters before the quarter in which it files the certificate. Irs forms 1040 If the election is made, the order or subdivision pays both the employer's and employee's share of the tax. Irs forms 1040 You do not pay any of the FICA tax. Irs forms 1040 Services performed outside the order. Irs forms 1040   Even if you are a member of a religious order who has taken a vow of poverty and the order requires you to turn over amounts you earn, your earnings are subject to federal income tax and either SE tax or FICA tax (including estimated tax payments and/or withholding) if you: Are self-employed or an employee of an organization outside your religious community, and Perform work not required by, or done on behalf of, the order. Irs forms 1040   In these cases, your income from self-employment or as an employee of that outside organization is taxable to you directly. Irs forms 1040 You may, however, be able to take a charitable deduction for the amount you turn over to the order. Irs forms 1040 See Publication 526, Charitable Contributions. Irs forms 1040 Rulings. Irs forms 1040   Organizations and individuals may request rulings from the IRS on whether they are religious orders, or members of a religious order, respectively, for FICA tax, SE tax, and federal income tax withholding purposes. Irs forms 1040 To request a ruling, follow the procedures in Revenue Procedure 2014-1, 2014-1 I. Irs forms 1040 R. Irs forms 1040 B. Irs forms 1040 1, available at www. Irs forms 1040 irs. Irs forms 1040 gov/irb/2014-1_IRB/ar05. Irs forms 1040 html. Irs forms 1040 Christian Science Practitioners and Readers Generally, your earnings from services you perform in your profession as a Christian Science practitioner or reader are subject to SE tax. Irs forms 1040 However, you can request an exemption as discussed under Exemption From Self-Employment (SE) Tax , later. Irs forms 1040 Practitioners. Irs forms 1040   Christian Science practitioners are members in good standing of the Mother Church, The First Church of Christ, Scientist, in Boston, Massachusetts, who practice healing according to the teachings of Christian Science. Irs forms 1040 State law specifically exempts Christian Science practitioners from licensing requirements. Irs forms 1040   Some Christian Science practitioners also are Christian Science teachers or lecturers. Irs forms 1040 Income from teaching or lecturing is considered the same as income from their work as practitioners. Irs forms 1040 Readers. Irs forms 1040   For tax purposes, Christian Science readers are considered the same as ordained, commissioned, or licensed ministers. Irs forms 1040 Coverage of Religious Workers (Church Employees) If you are a religious worker (a church employee) and are not in one of the classes already discussed, your wages are generally subject to social security and Medicare tax under FICA, not SECA. Irs forms 1040 Some exceptions are discussed next. Irs forms 1040 Election by Church To Exclude Its Employees From FICA Coverage Churches and qualified church-controlled organizations (church organizations) that are opposed for religious reasons to the payment of social security and Medicare taxes can elect to exclude their employees from FICA coverage. Irs forms 1040 If your employer makes this election, it does not pay the employer's portion of the FICA taxes or withhold from your pay your portion of the FICA taxes. Irs forms 1040 Instead, your wages are subject to SECA and you must pay SE tax on your wages if they exceed $108. Irs forms 1040 28 during the tax year. Irs forms 1040 However, you can request an exemption from SE tax if you are a member of a recognized religious sect, as discussed below. Irs forms 1040 Churches and church organizations make this election by filing two copies of Form 8274. Irs forms 1040 For more information about making this election, see Form 8274. Irs forms 1040 Election by Certain Church Employees Who Are Opposed to Social Security and Medicare You may be able to choose to be exempt from social security and Medicare taxes, including the SE tax, if you are a member of a recognized religious sect or division and work for a church (or church-controlled nonprofit division) that does not pay the employer's part of the social security tax on wages. Irs forms 1040 This exemption does not apply to your service, if any, as a minister of a church or as a member of a religious order. Irs forms 1040 Make this choice by filing Form 4029. Irs forms 1040 See Requesting Exemption—Form 4029 , later, under Members of Recognized Religious Sects. Irs forms 1040 U. Irs forms 1040 S. Irs forms 1040 Citizens and Resident and Nonresident Aliens To be covered under the SE tax provisions (SECA), individuals generally must be citizens or resident aliens of the United States. Irs forms 1040 Nonresident aliens are not covered under SECA unless a social security agreement in effect between the United States and the foreign country determines that you are covered under the U. Irs forms 1040 S. Irs forms 1040 social security system. Irs forms 1040 To determine your alien status, see Publication 519, U. Irs forms 1040 S. Irs forms 1040 Tax Guide for Aliens. Irs forms 1040 Residents of Puerto Rico, the U. Irs forms 1040 S. Irs forms 1040 Virgin Islands, Guam, the CNMI, and American Samoa. Irs forms 1040   If you are a resident of one of these U. Irs forms 1040 S. Irs forms 1040 possessions but not a U. Irs forms 1040 S. Irs forms 1040 citizen, for SE tax purposes you are treated the same as a citizen or resident alien of the United States. Irs forms 1040 For information on figuring the tax, see Self-Employment Tax: Figuring Net Earnings , later. Irs forms 1040 Ministerial Services Ministerial services, in general, are the services you perform in the exercise of your ministry, in the exercise of your duties as required by your religious order, or in the exercise of your profession as a Christian Science practitioner or reader. Irs forms 1040 Income you receive for performing ministerial services is subject to SE tax unless you have an exemption as explained later. Irs forms 1040 Even if you have an exemption, only the income you receive for performing ministerial services is exempt. Irs forms 1040 The exemption does not apply to any other income. Irs forms 1040 The following discussions provide more detailed information on ministerial services of ministers, members of a religious order, and Christian Science practitioners and readers. Irs forms 1040 Ministers Most services you perform as a minister, priest, rabbi, etc. Irs forms 1040 , are ministerial services. Irs forms 1040 These services include: Performing sacerdotal functions, Conducting religious worship, and Controlling, conducting, and maintaining religious organizations (including the religious boards, societies, and other integral agencies of such organizations) that are under the authority of a religious body that is a church or denomination. Irs forms 1040 You are considered to control, conduct, and maintain a religious organization if you direct, manage, or promote the organization's activities. Irs forms 1040 A religious organization is under the authority of a religious body that is a church or denomination if it is organized for and dedicated to carrying out the principles of a faith according to the requirements governing the creation of institutions of the faith. Irs forms 1040 Services for nonreligious organizations. Irs forms 1040   Your services for a nonreligious organization are ministerial services if the services are assigned or designated by your church. Irs forms 1040 Assigned or designated services qualify even if they do not involve performing sacerdotal functions or conducting religious worship. Irs forms 1040   If your services are not assigned or designated by your church, they are ministerial services only if they involve performing sacerdotal functions or conducting religious worship. Irs forms 1040 Services that are not part of your ministry. Irs forms 1040   Income from services you perform as an employee that are not ministerial services is subject to social security and Medicare tax withholding under FICA (not SECA) under the rules that apply to employees in general. Irs forms 1040 The following are not ministerial services. Irs forms 1040 Services you perform for nonreligious organizations other than the services stated above. Irs forms 1040 Services you perform as a duly ordained, commissioned, or licensed minister of a church as an employee of the United States, the District of Columbia, a foreign government, or any of their political subdivisions. Irs forms 1040 These services are not ministerial services even if you are performing sacerdotal functions or conducting religious worship. Irs forms 1040 (For example, if you perform services as a chaplain in the Armed Forces of the United States, those services are not ministerial services. Irs forms 1040 ) Services you perform in a government-owned and operated hospital. Irs forms 1040 (These services are considered performed by a government employee, not by a minister as part of the ministry. Irs forms 1040 ) However, services that you perform at a church-related hospital or health and welfare institution, or a private nonprofit hospital, are considered to be part of the ministry and are considered ministerial services. Irs forms 1040 Books or articles. Irs forms 1040   Writing religious books or articles is considered to be in the exercise of your ministry and is considered a ministerial service. Irs forms 1040   This rule also applies to members of religious orders and to Christian Science practitioners and readers. Irs forms 1040 Members of Religious Orders Services you perform as a member of a religious order in the exercise of duties required by the order are ministerial services. Irs forms 1040 The services are considered ministerial because you perform them as an agent of the order. Irs forms 1040 For example, if the order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to perform the services as an agent of the order. Irs forms 1040 However, if the order directs you to work outside the order, this employment will not be considered a duty required by the order unless: Your services are the kind that are ordinarily performed by members of the order, and Your services are part of the duties that must be exercised for, or on behalf of, the religious order as its agent. Irs forms 1040 Effect of employee status. Irs forms 1040   Ordinarily, if your services are not considered directed or required of you by the order, you and the outside party for whom you work are considered employee and employer. Irs forms 1040 In this case, your earnings from the services are taxed under the rules that apply to employees in general, not under the rules for services provided as agent for the order. Irs forms 1040 This result is true even if you have taken a vow of poverty. Irs forms 1040 Example. Irs forms 1040 Pat Brown and Chris Green are members of a religious order and have taken vows of poverty. Irs forms 1040 They renounce all claims to their earnings. Irs forms 1040 The earnings belong to the order. Irs forms 1040 Pat is a licensed attorney. Irs forms 1040 The superiors of the order instructed her to get a job with a law firm. Irs forms 1040 Pat joined a law firm as an employee and, as she requested, the firm made the salary payments directly to the order. Irs forms 1040 Chris is a secretary. Irs forms 1040 The superiors of the order instructed him to accept a job with the business office of the church that supervises the order. Irs forms 1040 Chris took the job and gave all his earnings to the order. Irs forms 1040 Pat's services are not duties required by the order. Irs forms 1040 Her earnings are subject to social security and Medicare tax under FICA and to federal income tax. Irs forms 1040 Chris' services are duties required by the order. Irs forms 1040 He is acting as an agent of the order and not as an employee of a third party. Irs forms 1040 He does not include the earnings in gross income, and they are not subject to income tax withholding or to social security and Medicare tax under FICA or SECA. Irs forms 1040 Christian Science Practitioners and Readers Services you perform as a Christian Science practitioner or reader in the exercise of your profession are ministerial services. Irs forms 1040 Amounts you receive for performing these services are generally subject to SE tax. Irs forms 1040 You may request an exemption from SE tax, discussed next, which applies only to those services. Irs forms 1040 Exemption From Self-Employment (SE) Tax You can request an exemption from SE tax if you are a member of the clergy (minister, member of a religious order, or Christian Science practitioner or reader) or a member of a recognized religious sect. Irs forms 1040 Generally, members of religious orders who have taken a vow of poverty are already exempt from paying SE tax, as discussed earlier under Members of Religious Orders under Social Security Coverage. Irs forms 1040 They do not have to request the exemption. Irs forms 1040 Who cannot be exempt. Irs forms 1040   You cannot be exempt from SE tax if you made one of the following elections to be covered under social security. Irs forms 1040 These elections are irrevocable. Irs forms 1040 You elected to be covered under social security by filing Form 2031, Revocation of Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners, for your 1986, 1987, 2000, or 2001 tax year. Irs forms 1040 You elected before 1968 to be covered under social security for your ministerial services. Irs forms 1040 Requesting exemption. Irs forms 1040    Table 2, earlier, briefly summarizes the procedure for requesting exemption from the SE tax. Irs forms 1040 More detailed explanations follow. Irs forms 1040 If you are a minister, member of a religious order, or Christian Science practitioner, an approved exemption only applies to earnings you receive for ministerial services, discussed earlier. Irs forms 1040 It does not apply to any other self-employment income. Irs forms 1040 Table 2. Irs forms 1040 The Self-Employment Tax Exemption Application and Approval Process   Who Can Apply Members of the Clergy Members of Recognized  Religious Sects How File Form 4361 File Form 4029 When File by the due date (including extensions) of your income tax return for the second tax year in which you had at least $400 of net earnings from self-employment (at least part from ministerial services) File anytime Approval If approved, you will receive an approved copy of Form 4361 If approved, you will receive an approved copy of Form 4029 Effective Date For all tax years after 1967 in which you have at least $400 of net earnings from self-employment For all tax years beginning with the first year you meet the eligibility requirements discussed later Members of the Clergy To claim the exemption from SE tax, you must meet all of the following conditions. Irs forms 1040 You file Form 4361, described below under Requesting Exemption—Form 4361 . Irs forms 1040 You are conscientiously opposed to public insurance because of your individual religious considerations (not because of your general conscience), or you are opposed because of the principles of your religious denomination. Irs forms 1040 You file for other than economic reasons. Irs forms 1040 You inform the ordaining, commissioning, or licensing body of your church or order that you are opposed to public insurance if you are a minister or a member of a religious order (other than a vow-of-poverty member). Irs forms 1040 This requirement does not apply to Christian Science practitioners or readers. Irs forms 1040 You establish that the organization that ordained, commissioned, or licensed you, or your religious order, is a tax-exempt religious organization. Irs forms 1040 You establish that the organization is a church or a convention or association of churches. Irs forms 1040 You did not make an election discussed earlier under Who cannot be exempt . Irs forms 1040 You sign and return the statement the IRS mails to you to certify that you are requesting an exemption based on the grounds listed on the statement. Irs forms 1040 Requesting Exemption—Form 4361 To request exemption from SE tax, file Form 4361 in triplicate (original and two copies) with the IRS. Irs forms 1040 The IRS will return to you a copy of the Form 4361 that you filed indicating whether it has approved your exemption. Irs forms 1040 If it is approved, keep the approved copy of Form 4361 in your permanent records. Irs forms 1040 When to file. Irs forms 1040   File Form 4361 by the date your income tax return is due, including extensions, for the second tax year in which both of the following are true. Irs forms 1040 You have net earnings from self-employment of at least $400. Irs forms 1040 Any part of those net earnings was from ministerial services you performed as a: Minister, Member of a religious order, or Christian Science practitioner or reader. Irs forms 1040 The 2 years do not have to be consecutive tax years. Irs forms 1040    The approval process can take some time, so you should file Form 4361 as soon as possible. Irs forms 1040 Example 1. Irs forms 1040 Rev. Irs forms 1040 Lawrence Jaeger, a clergyman ordained in 2013, has net self-employment earnings as a minister of $450 in 2013 and $500 in 2014. Irs forms 1040 He must file his application for exemption by the due date, including extensions, for his 2014 income tax return. Irs forms 1040 However, if Rev. Irs forms 1040 Jaeger does not receive IRS approval for an exemption by April 15, 2015, his SE tax for 2014 is due by that date. Irs forms 1040 Example 2. Irs forms 1040 Rev. Irs forms 1040 Louise Wolfe has only $300 in net self-employment earnings as a minister in 2013, but earned more than $400 in 2012 and expects to earn more than $400 in 2014. Irs forms 1040 She must file her application for exemption by the due date, including extensions, for her 2014 income tax return. Irs forms 1040 However, if she does not receive IRS approval for an exemption by April 15, 2015, her SE tax for 2014 is due by that date. Irs forms 1040 Example 3. Irs forms 1040 In 2011, Rev. Irs forms 1040 David Moss was ordained a minister and had $700 in net self-employment earnings as a minister. Irs forms 1040 In 2012, he received $1,000 as a minister, but his related expenses were over $1,000. Irs forms 1040 Therefore, he had no net self-employment earnings as a minister in 2012. Irs forms 1040 Also in 2012, he opened a book store and had $8,000 in net self-employment earnings from the store. Irs forms 1040 In 2013, he had net self-employment earnings of $1,500 as a minister and $10,000 net self-employment earnings from the store. Irs forms 1040 Rev. Irs forms 1040 Moss had net earnings from self-employment in 2011 and 2013 that were $400 or more each year, and part of the self-employment earnings in each of those years was for his services as a minister. Irs forms 1040 Thus, he must file his application for exemption by the due date, including extensions, for his 2013 income tax return. Irs forms 1040 Death of individual. Irs forms 1040   The right to file an application for exemption ends with an individual's death. Irs forms 1040 A surviving spouse, executor, or administrator cannot file an exemption application for a deceased clergy member. Irs forms 1040 Effective date of exemption. Irs forms 1040   An approved exemption is effective for all tax years after 1967 in which you have $400 or more of net earnings from self-employment and any part of those earnings is for services as a member of the clergy. Irs forms 1040 Once the exemption is approved, it is irrevocable. Irs forms 1040 Example. Irs forms 1040 Rev. Irs forms 1040 Trudy Austin, ordained in 2010, had $400 or more in net self-employment earnings as a minister in both 2010 and 2013. Irs forms 1040 She files an application for exemption on February 20, 2014. Irs forms 1040 If an exemption is granted, it is effective for 2010 and the following years. Irs forms 1040 Refunds of SE tax. Irs forms 1040   If, after receiving an approved Form 4361, you find that you overpaid SE tax, you can file a claim for refund on Form 1040X. Irs forms 1040 Generally, for a refund, you must file Form 1040X within 3 years from the date you filed the return or within 2 years from the date you paid the tax, whichever is later. Irs forms 1040 A return you filed, or tax you paid, before the due date is considered to have been filed or paid on the due date. Irs forms 1040   If you file a claim after the 3-year period but within 2 years from the time you paid the tax, the credit or refund will not be more than the tax you paid within the 2 years immediately before you file the claim. Irs forms 1040 Members of Recognized Religious Sects If you are a member of a recognized religious sect, or a division of a recognized religious sect, you can apply for an exemption from payment of social security and Medicare taxes on both your self-employment income and the wages you earn from an employer who also has an exemption. Irs forms 1040 Exception. Irs forms 1040   If you received social security benefits or payments, or anyone else received these benefits or payments based on your wages or self-employment income, you cannot apply. Irs forms 1040 However, if you pay your benefits back, you may be considered for exemption. Irs forms 1040 Contact your local Social Security Administration office to find out the amount you must pay back. Irs forms 1040 Eligibility requirements. Irs forms 1040   To claim this exemption from SE tax, all the following requirements must be met. Irs forms 1040 You must file Form 4029, discussed later under Requesting Exemption—Form 4029 . Irs forms 1040 As a follower of the established teachings of the sect or division, you must be conscientiously opposed to accepting benefits of any private or public insurance that makes payments for death, disability, old age, retirement, or medical care, or provides services for medical care. Irs forms 1040 You must waive all rights to receive any social security payment or benefit and agree that no benefits or payments will be made to anyone else based on your wages and self-employment income. Irs forms 1040 The Commissioner of Social Security must determine that: Your sect or division has the established teachings as described in (2) above, It is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and The sect or division has existed at all times since December 31, 1950. Irs forms 1040 Requesting Exemption—Form 4029 To request the exemption, file Form 4029 in triplicate (original and two copies) with the Social Security Administration at the address shown on the form. Irs forms 1040 The sect or division must complete part of the form. Irs forms 1040 The IRS will return to you a copy of the Form 4029 that you filed indicating whether it has approved your exemption. Irs forms 1040 If it is approved, keep the approved copy of Form 4029 in your permanent records. Irs forms 1040 When to file. Irs forms 1040   You can file Form 4029 at any time. Irs forms 1040   If you have an approved exemption from SE tax and for some reason that approved exemption ended, you must file a new Form 4029 if you subsequently meet the eligibility requirements, discussed earlier. Irs forms 1040 See Effective date of exemption next for information on when the newly approved exemption would become effective. Irs forms 1040    If you have a previously approved exemption from SE tax and you change membership to another recognized religious sect, without any change to your eligibility requirements, then you do not need to file a new Form 4029. Irs forms 1040 Effective date of exemption. Irs forms 1040   An approved exemption from SE tax generally is effective for all tax years beginning with the first year you meet the eligibility requirements discussed earlier. Irs forms 1040 (For example, if you meet the eligibility requirements in 2011, you file Form 4029 in 2012, and the IRS approves your exemption in 2013, your exemption is effective for tax year 2011 and all later years. Irs forms 1040 )   The exemption will end if you fail to meet the eligibility requirements or if the Commissioner of Social Security determines that the sect or division fails to meet them. Irs forms 1040 You must notify the IRS within 60 days if you are no longer a member of the religious group, or if you no longer follow the established teachings of this group. Irs forms 1040 The exemption will end for the tax year where you or your sect/division first fails to meet the eligibility requirements. Irs forms 1040 Refunds of SE tax paid. Irs forms 1040    To get a refund of any SE tax you paid while the exemption was in effect, file Form 1040X. Irs forms 1040 For information on filing this form, see Refunds of SE tax under Requesting Exemption—Form 4361, earlier. Irs forms 1040 Exemption From FICA Taxes Generally, under FICA, the employer and the employee each pay half of the social security and Medicare tax. Irs forms 1040 Both the employee and the employer, if they meet the eligibility requirements discussed earlier, can apply to be exempt from their share of FICA taxes on wages paid by the employer to the employee. Irs forms 1040 A partnership in which each partner holds a religious exemption from social security and Medicare is an employer for this purpose. Irs forms 1040 If the employer's application is approved, the exemption will apply only to FICA taxes on wages paid to employees who also received an approval of identical applications. Irs forms 1040 Information for employers. Irs forms 1040   If you have an approved Form 4029 and you have an employee who has an approved Form 4029, do not report wages you paid to the employee as social security and Medicare wages. Irs forms 1040   If you have an employee who does not have an approved Form 4029, you must withhold the employee's share of social security and Medicare taxes and pay the employer's share. Irs forms 1040 Form W-2. Irs forms 1040   When preparing a Form W-2 for an employee with an approved Form 4029, enter “Form 4029” in box 14, “Other. Irs forms 1040 ” Do not make any entries in boxes 3, 4, 5, or 6. Irs forms 1040 Forms 941, 943, and 944. Irs forms 1040   If both you and your employee have received approved Forms 4029, do not include these exempt wages on the following forms. Irs forms 1040 Instead, follow the instructions given below. Irs forms 1040 Form 941, Employer's QUARTERLY Federal Tax Return: check the box on line 4 and enter “Form 4029” in the empty space below the check box. Irs forms 1040 Form 943, Employer's Annual Federal Tax Return for Agricultural Employees: enter “Form 4029” on the dotted line next to the lines 2 and 4 entry spaces. Irs forms 1040 Form 944, Employer's ANNUAL Federal Tax Return: check the box on line 3 and enter “Form 4029” in the empty space below the check box. Irs forms 1040 Effective date. Irs forms 1040   An approved exemption from FICA becomes effective on the first day of the first calendar quarter after the quarter in which you file Form 4029. Irs forms 1040 The exemption will end on the last day of the calendar quarter before the quarter in which the employer, employee, sect, or division fails to meet the requirements. Irs forms 1040 Self-Employment Tax: Figuring Net Earnings There are two methods for figuring your net earnings from self-employment as a member of the clergy or a religious worker. Irs forms 1040 Regular method. Irs forms 1040 Nonfarm optional method. Irs forms 1040 You may find Worksheets 1 through 4 helpful in figuring your net earnings from self-employment. Irs forms 1040 Blank worksheets are in the back of this publication, after the Comprehensive Example. Irs forms 1040 Regular Method Most people use the regular method. Irs forms 1040 Under this method, figure your net earnings from self-employment by totaling your gross income for services you performed as a minister, a member of a religious order who has not taken a vow of poverty, or a Christian Science practitioner or reader. Irs forms 1040 Then, subtract your allowable business deductions and multiply the difference by 92. Irs forms 1040 35% (. Irs forms 1040 9235). Irs forms 1040 Use Schedule SE (Form 1040) to figure your net earnings and SE tax. Irs forms 1040 If you are an employee of a church that elected to exclude you from FICA coverage, figure net earnings by multiplying your church wages shown on Form W-2 by 92. Irs forms 1040 35% (. Irs forms 1040 9235). Irs forms 1040 Do not reduce your wages by any business deductions when making this computation. Irs forms 1040 Use Schedule SE (Form 1040), Section B, to figure your net earnings and SE tax. Irs forms 1040 If you have an approved exemption, or you are automatically exempt, do not include the income or deductions from ministerial services in figuring your net earnings from self-employment. Irs forms 1040 Amounts included in gross income. Irs forms 1040   To figure your net earnings from self-employment (on Schedule SE (Form 1040)), include in gross income: Salaries and fees for your ministerial services (discussed earlier), Offerings you receive for marriages, baptisms, funerals, masses, etc. Irs forms 1040 , The value of meals and lodging provided to you, your spouse, and your dependents for your employer's convenience, The fair rental value of a parsonage provided to you (including the cost of utilities that are furnished) and the rental allowance (including an amount for payment of utilities) paid to you, and Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary. Irs forms 1040 This amount is also subject to income tax. Irs forms 1040   For the income tax treatment of items (2) and (4), see Income Tax: Income and Expenses , later. Irs forms 1040 Example. Irs forms 1040 Pastor Roger Adams receives an annual salary of $39,000 as a full-time minister. Irs forms 1040 The $39,000 includes $5,000 that is designated as a rental allowance to pay utilities. Irs forms 1040 His church owns a parsonage that has a fair rental value of $12,000 per year. Irs forms 1040 The church gives Pastor Adams the use of the parsonage. Irs forms 1040 He is not exempt from SE tax. Irs forms 1040 He must include $51,000 ($39,000 plus $12,000) when figuring his net earnings for SE tax purposes. Irs forms 1040 The results would be the same if, instead of the use of the parsonage and receipt of the rental allowance for utilities, Pastor Adams had received an annual salary of $51,000 of which $17,000 ($5,000 plus $12,000) per year was designated as a rental allowance. Irs forms 1040 Overseas duty. Irs forms 1040   Your net earnings from self-employment are determined without any foreign earned income exclusion or the foreign housing exclusion or deduction if you are a U. Irs forms 1040 S. Irs forms 1040 citizen or resident alien serving abroad and living in a foreign country. Irs forms 1040   For information on excluding foreign earned income or the foreign housing amount, see Publication 54. Irs forms 1040 Example. Irs forms 1040 Diane Jones was the minister of a U. Irs forms 1040 S. Irs forms 1040 church in Mexico. Irs forms 1040 She earned $35,000 in that position and was able to exclude it all for income tax purposes under the foreign earned income exclusion. Irs forms 1040 The United States does not have a social security agreement with Mexico, so Mrs. Irs forms 1040 Jones is subject to U. Irs forms 1040 S. Irs forms 1040 SE tax and must include $35,000 when figuring net earnings from self-employment. Irs forms 1040 Specified U. Irs forms 1040 S. Irs forms 1040 possessions. Irs forms 1040    The exclusion from gross income for amounts derived from American Samoa or Puerto Rico does not apply in computing net earnings from self-employment. Irs forms 1040 Also see Residents of Puerto Rico, the U. Irs forms 1040 S. Irs forms 1040 Virgin Islands, Guam, the CNMI, and American Samoa , earlier, under U. Irs forms 1040 S. Irs forms 1040 Citizens and Resident and Nonresident Aliens. Irs forms 1040 Amounts not included in gross income. Irs forms 1040   Do not include the following amounts in gross income when figuring your net earnings from self-employment. Irs forms 1040 Offerings that others made to the church. Irs forms 1040 Contributions by your church to a tax-sheltered annuity plan set up for you, including any salary reduction contributions (elective deferrals) that are not included in your gross income. Irs forms 1040 Pension payments or retirement allowances you receive for your past ministerial services. Irs forms 1040 The rental value of a parsonage or a parsonage allowance provided to you after you retire. Irs forms 1040 Allowable deductions. Irs forms 1040   When figuring your net earnings from self-employment, deduct all your expenses related to your ministerial services performed as a self-employed person. Irs forms 1040 These are ministerial expenses you incurred while working other than as a common-law employee of the church. Irs forms 1040 They include expenses incurred in performing marriages and baptisms, and in delivering speeches. Irs forms 1040 Deduct these expenses on Schedule C or C-EZ (Form 1040), and carry the net amount to line 2 of Schedule SE (Form 1040), Section A or B. Irs forms 1040   Wages earned as a common-law employee (explained earlier) of a church are generally subject to self-employment tax unless an exemption is requested, as discussed earlier under Exemption From Self-Employment (SE) Tax . Irs forms 1040 Subtract any allowable expenses (including unreimbursed employee business expenses) from those wages, include the net amount on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Irs forms 1040 Do not complete Schedule C or C-EZ (Form 1040). Irs forms 1040 However, for income tax purposes, the expenses are allowed only as an itemized deduction on Schedule A (Form 1040) to the extent they exceed 2% of adjusted gross income. Irs forms 1040 Employee reimbursement arrangements. Irs forms 1040   If you received an advance, allowance, or reimbursement for your employee expenses, how you report this amount and your employee expenses depends on whether your employer reimbursed you under an accountable plan or a nonaccountable plan. Irs forms 1040 Ask your employer if you are not sure if it reimburses you using an accountable or a nonaccountable plan. Irs forms 1040 Accountable plans. Irs forms 1040   To be an accountable plan, your employer's reimbursement arrangement must include all three of the following rules. Irs forms 1040 Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Irs forms 1040 You must adequately account to your employer for these expenses within a reasonable period of time. Irs forms 1040 You must return any excess reimbursement or allowance within a reasonable period of time. Irs forms 1040   The reimbursement is not reported on your Form W-2. Irs forms 1040 Generally, if your expenses equal your reimbursement, you have no deduction. Irs forms 1040 If your expenses are more than your reimbursement, you can deduct your excess expenses for SE tax and income tax purposes. Irs forms 1040 Nonaccountable plan. Irs forms 1040   A nonaccountable plan is a reimbursement arrangement that does not meet all three of the rules listed under Accountable plans above. Irs forms 1040 In addition, even if your employer has an accountable plan, the following payments will be treated as being paid under a nonaccountable plan. Irs forms 1040 Excess reimbursements you fail to return to your employer. Irs forms 1040 Reimbursement of nondeductible expenses related to your employer's business. Irs forms 1040   Your employer will combine any reimbursement paid to you under a nonaccountable plan with your wages, salary, or other compensation and report the combined total in box 1 of your Form W-2. Irs forms 1040 Since reimbursements under a nonaccountable plan are included in your gross income, you can deduct your related expenses (for SE tax and income tax purposes) regardless of whether they are more than, less than, or equal to your reimbursement. Irs forms 1040   For more information on accountable and nonaccountable plans, see Publication 463, Travel, Entertainment, Gift, and Car Expenses. Irs forms 1040 Married Couple Missionary Team If both spouses are duly ordained, commissioned, or licensed ministers of a church and have an agreement that each will perform specific services for which they are paid jointly or separately, they must divide the self-employment income according to the agreement. Irs forms 1040 If the agreement is with one spouse only and the other spouse is not paid for any specific duties, amounts received for their services are included only in the self-employment income of the spouse having the agreement. Irs forms 1040 Earnings Subject to SE Tax For 2013, the maximum net earnings from self-employment subject to social security (old age, survivors, and disability insurance) tax is $113,700 minus any wages and tips you earned that were subject to social security tax. Irs forms 1040 The tax rate for the social security part is 12. Irs forms 1040 4%. Irs forms 1040 In addition, all of your net earnings are subject to the Medicare (hospital insurance) part of the SE tax. Irs forms 1040 This tax rate is 2. Irs forms 1040 9%. Irs forms 1040 The combined self-employment tax rate is 15. Irs forms 1040 3%. Irs forms 1040 Additional Medicare Tax. Irs forms 1040   Beginning in 2013, a 0. Irs forms 1040 9% Additional Medicare Tax applies to Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that are more than: $125,000 if married filing separately, $250,000 if married filing jointly, or $200,000 for any other filing status. Irs forms 1040 Medicare wages and self-employment income are combined to determine if income exceeds the threshold. Irs forms 1040 A self-employment loss is not considered for purposes of this tax. Irs forms 1040 RRTA compensation is separately compared to the threshold. Irs forms 1040 For more information, see Form 8959, Additional Medicare Tax, and its separate instructions. Irs forms 1040 Nonfarm Optional Method You may be able to use the nonfarm optional method for figuring your net earnings from self-employment. Irs forms 1040 In general, the nonfarm optional method is intended to permit continued coverage for social security and Medicare purposes when your income for the tax year is low. Irs forms 1040 You may use the nonfarm optional method if you meet all the following tests. Irs forms 1040 You are self-employed on a regular basis. Irs forms 1040 You meet this test if your actual net earnings from self-employment were $400 or more in at least 2 of the 3 tax years before the one for which you use this method. Irs forms 1040 The net earnings can be from either farm or nonfarm earnings or both. Irs forms 1040 You have used this method less than 5 prior years. Irs forms 1040 (There is a 5-year lifetime limit. Irs forms 1040 ) The years do not have to be consecutive. Irs forms 1040 Your net nonfarm profits were: Less than $5,024, and Less than 72. Irs forms 1040 189% of your gross nonfarm income. Irs forms 1040 If you meet all three tests, use Table 3 to figure your net earnings from self-employment under the nonfarm optional method. Irs forms 1040 Table 3. Irs forms 1040 Figuring Nonfarm Net Earnings IF your gross nonfarm income is . Irs forms 1040 . Irs forms 1040 . Irs forms 1040 THEN your net earnings are equal to . Irs forms 1040 . Irs forms 1040 . Irs forms 1040 $6,960 or less Two-thirds of your gross nonfarm income. Irs forms 1040 More than $6,960 $4,640. Irs forms 1040 Actual net earnings. Irs forms 1040   Multiply your total earnings subject to SE tax by 92. Irs forms 1040 35% (. Irs forms 1040 9235) to get actual net earnings. Irs forms 1040 Actual net earnings are equivalent to net earnings under the “Regular Method. Irs forms 1040 ” More information. Irs forms 1040   For more information on the nonfarm optional method, see Publication 334, Tax Guide for Small Business, and the Schedule SE (Form 1040) instructions. Irs forms 1040 Income Tax: Income and Expenses Some income and expense items are treated the same for both income tax and SE tax purposes and some are treated differently. Irs forms 1040 Note. Irs forms 1040 For purposes of this section, references to members of the clergy are only to ministers or members of a religious order. Irs forms 1040 Income Items The tax treatment of offerings and fees, outside earnings, rental allowances, rental value of a parsonage, earnings of members of religious orders, and foreign earned income is discussed here. Irs forms 1040 Offerings and Fees If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc. Irs forms 1040 , in addition to your salary. Irs forms 1040 If the offering is made to the religious institution, it is not taxable to you. Irs forms 1040 Outside Earnings If you are a member of a religious organization and you give your outside earnings to the organization, you still must include the earnings in your income. Irs forms 1040 However, you may be entitled to a charitable contribution deduction for the amount paid to the organization. Irs forms 1040 For more information, see Publication 526. Irs forms 1040 Exclusion of Rental Allowance and Fair Rental Value of a Parsonage Ordained, commissioned, or licensed ministers of the gospel may be able to exclude from income tax the rental allowance or fair rental value of a parsonage that is provided to them as pay for their services. Irs forms 1040 Services include: Ministerial services, discussed earlier, Administrative duties and teaching at theological seminaries, and The ordinary duties of a minister performed as an employee of the United States (other than as a chaplain in the Armed Forces), a state, possession, political subdivision, or the District of Columbia. Irs forms 1040 This exclusion applies only for income tax purposes. Irs forms 1040 It does not apply for SE tax purposes, as discussed earlier under Amounts included in gross income under Self-Employment Tax: Figuring Net Earnings. Irs forms 1040 Designation requirement. Irs forms 1040   The church or organization that employs you must officially designate the payment as a housing allowance before it makes the payment. Irs forms 1040 It must designate a definite amount. Irs forms 1040 It cannot determine the amount of the housing allowance at a later date. Irs forms 1040 If the church or organization does not officially designate a definite amount as a housing allowance, you must include your total salary in your income. Irs forms 1040   If you are employed and paid by a local congregation, a resolution by a national church agency of your denomination does not effectively designate a housing allowance for you. Irs forms 1040 The local congregation must officially designate the part of your salary that is a housing allowance. Irs forms 1040 However, a resolution of a national church agency can designate your housing allowance if you are directly employed by the national agency. Irs forms 1040 Rental allowances. Irs forms 1040   If you receive in your salary an amount officially designated as a rental allowance (including an amount to pay utility costs), you can exclude the allowance from your gross income if: You use the amount to provide or rent a home, and The amount is not more than reasonable pay for your services. Irs forms 1040   The amount you exclude cannot be more than the fair rental value of the home, including furnishings, plus the cost of utilities. Irs forms 1040 Fair rental value of parsonage. Irs forms 1040   You can exclude from gross income the fair rental value of a house or parsonage, including utilities, furnished to you as part of your earnings. Irs forms 1040 However, the exclusion cannot be more than the reasonable pay for your services. Irs forms 1040 If you pay for the utilities, you can exclude any allowance designated for utility costs, up to your actual cost. Irs forms 1040 Example. Irs forms 1040 Rev. Irs forms 1040 Joanna Baker is a full-time minister. Irs forms 1040 The church allows her to use a parsonage that has an annual fair rental value of $24,000. Irs forms 1040 The church pays her an annual salary of $67,000, of which $7,500 is designated for utility costs. Irs forms 1040 Her actual utility costs during the year were $7,000. Irs forms 1040 For income tax purposes, Rev. Irs forms 1040 Baker excludes $31,000 from gross income ($24,000 fair rental value of the parsonage plus $7,000 from the allowance for utility costs). Irs forms 1040 She will report $60,000 ($59,500 salary plus $500 of unused utility allowance). Irs forms 1040 Her income for SE tax purposes, however, is $91,000 ($67,000 salary + $24,000 fair rental value of the parsonage). Irs forms 1040 Home ownership. Irs forms 1040   If you own your home and you receive as part of your salary a housing or rental allowance, you may exclude from gross income the smallest of: The amount actually used to provide a home, The amount officially designated as a rental allowance, or The fair rental value of the home, including furnishings, utilities, garage, etc. Irs forms 1040 Excess rental allowance. Irs forms 1040   You must include in gross income the amount of any rental allowance that is more than the smallest of: Your reasonable salary, The fair rental value of the home plus utilities, or The amount actually used to provide a home. Irs forms 1040   Include in the total on Form 1040, line 7. Irs forms 1040 On the dotted line next to line 7, enter “Excess allowance” and the amount. Irs forms 1040 You may deduct the home mortgage interest and real estate taxes paid on your home even though you pay all or part of those expenses with funds you get through a tax-free rental or parsonage allowance. Irs forms 1040 However, you can only deduct these expenses as itemized deductions on Schedule A (Form 1040). Irs forms 1040 Retired ministers. Irs forms 1040   If you are a retired minister, you can exclude from your gross income the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance. Irs forms 1040 However, a minister's surviving spouse cannot exclude the rental value unless the rental value is for ministerial services he or she performs or performed. Irs forms 1040 Teachers or administrators. Irs forms 1040   If you are a minister employed as a teacher or administrator by a church school, college, or university, you are performing ministerial services for purposes of the housing exclusion. Irs forms 1040 However, if you perform services as a teacher or administrator on the faculty of a nonchurch college, you cannot exclude from your income a housing allowance or the value of a home that the college provides to you. Irs forms 1040    If you live in faculty lodging as an employee of an educational institution or academic health center, all or part of the value of that lodging may be nontaxable under a different rule. Irs forms 1040 In Publication 525, see Faculty lodging in the discussion on meals and lodging under Fringe Benefits. Irs forms 1040   If you serve as a minister of music or minister of education, or serve in an administrative or other function of your religious organization, but are not authorized to perform substantially all of the religious duties of an ordained minister in your church (even if you are commissioned as a minister of the gospel), the housing exclusion does not apply to you. Irs forms 1040 Theological students. Irs forms 1040   If you are a theological student serving a required internship as a part-time or assistant pastor, you cannot exclude a parsonage or rental allowance from your income unless you are ordained, commissioned, or licensed as a minister. Irs forms 1040 Traveling evangelists. Irs forms 1040   You can exclude a designated rental allowance from out-of-town churches if you meet all of the following requirements. Irs forms 1040 You are an ordained minister. Irs forms 1040 You perform ministerial services at churches located away from your community. Irs forms 1040 You actually use the rental allowance to maintain your permanent home. Irs forms 1040 Cantors. Irs forms 1040   If you have a bona fide commission and your congregation employs you on a full-time basis to perform substantially all the religious functions of the Jewish faith, you can exclude a rental allowance from your gross income. Irs forms 1040 Earnings—Members of Religious Orders Your earnings may be exempt from both income tax and SE tax if you are a member of a religious order who: Has taken a vow of poverty, Receives earnings for services performed as an agent of the order and in the exercise of duties required by the order, and Renounces the earnings and gives them to the order. Irs forms 1040 See Members of Religious Orders , earlier, under Social Security Coverage. Irs forms 1040 Foreign Earned Income Certain income may be exempt from income tax if you work in a foreign country or in a specified U. Irs forms 1040 S. Irs forms 1040 possession. Irs forms 1040 Publication 54 discusses the foreign earned income exclusion. Irs forms 1040 Publication 570, Tax Guide for Individuals With Income From U. Irs forms 1040 S. Irs forms 1040 Possessions, covers the rules for taxpayers with income from U. Irs forms 1040 S. Irs forms 1040 possessions. Irs forms 1040 You can get these free publications from the Internal Revenue Service at IRS. Irs forms 1040 gov or from most U. Irs forms 1040 S. Irs forms 1040 Embassies or consulates. Irs forms 1040 Expense Items The tax treatment of ministerial trade or business expenses, expenses allocable to tax-free income, and health insurance costs is discussed here. Irs forms 1040 Ministerial Trade or Business Expenses as an Employee When you figure your income tax, you must itemize your deductions on Schedule A (Form 1040) to claim allowable deductions for ministerial trade or business expenses incurred while working as an employee. Irs forms 1040 You also may have to file Form 2106, Employee Business Expenses (or Form 2106-EZ, Unreimbursed Employee Business Expenses). Irs forms 1040 You claim these expenses as miscellaneous itemized deductions that are subject to the 2%-of-adjusted-gross-income (AGI) limit. Irs forms 1040 See Publication 529 for more information on this limit. Irs forms 1040 However, you cannot deduct any of your employee business expenses that are allocable to tax-free income (discussed next). Irs forms 1040 Expenses Allocable to Tax-Free Income If you receive a rental or parsonage allowance that is exempt from income tax (tax free), you must allocate a portion of the expenses of operating your ministry to that tax-free income. Irs forms 1040 You cannot deduct the portion of your expenses that you allocate to your tax-free rental or parsonage allowance. Irs forms 1040 Exception. Irs forms 1040   This rule does not apply to your deductions for home mortgage interest or real estate taxes on your home. Irs forms 1040 Figuring the allocation. Irs forms 1040   Figure the portion of your otherwise deductible expenses that you cannot deduct (because you must allocate that portion to tax-free income) by multiplying the expenses by the following fraction:      Tax-free rental or parsonage allowance     All income (taxable and tax free) earned from your ministry           When figuring the allocation, include the income and expenses related to the ministerial duties you perform both as an employee and as a self-employed person. Irs forms 1040    Reduce your otherwise deductible expenses only in figuring your income tax, not your SE tax. Irs forms 1040 Example. Irs forms 1040 Rev. Irs forms 1040 Charles Ashford received $40,000 in earnings for ministerial services consisting of a $28,000 salary for ministerial services performed as an employee, $2,000 for weddings and baptisms performed as a self-employed person, and a $10,000 tax-free parsonage allowance. Irs forms 1040 He incurred $4,000 of unreimbursed expenses connected with his earnings for ministerial services. Irs forms 1040 $3,500 of the $4,000 is for employee expenses related to his ministerial salary, and $500 is related to the weddings and baptisms he performed as a self-employed person. Irs forms 1040 Rev. Irs forms 1040 Ashford figures the nondeductible (tax-free) portion of expenses related to his ministerial salary as follows: ($10,000 ÷ $40,000) x $3,500 = $875   Rev. Irs forms 1040 Ashford figures the nondeductible (tax-free) portion of expenses related to his wedding and baptism income as follows: ($10,000 ÷ $40,000) x $500 = $125 Required statement. Irs forms 1040   If you receive a tax-free rental or parsonage allowance and have ministerial expenses, attach a statement to your tax return. Irs forms 1040 The statement must contain all of the following information. Irs forms 1040 A list of each item of taxable ministerial income by source (such as wages, salary, weddings, baptisms, etc. Irs forms 1040 ) plus the amount. Irs forms 1040 A list of each item of tax-free ministerial income by source (parsonage allowance) plus the amount. Irs forms 1040 A list of each item of otherwise deductible ministerial expenses plus the amount. Irs forms 1040 How you figured the nondeductible part of your otherwise deductible expenses. Irs forms 1040 A statement that the other deductions claimed on your tax return are not allocable to your tax-free income. Irs forms 1040   See the attachments prepared for the Comprehensive Example , later. Irs forms 1040 Following the example, you will find blank worksheets for your own use. Irs forms 1040 Health Insurance Costs of Self-Employed Ministers If you are self-employed, you may be able to deduct the amount you paid in 2013 for medical and dental insurance and qualified long-term care insurance for you, your spouse, and your dependents. Irs forms 1040 If you qualify, you can take this deduction as an adjustment to income on Form 1040, line 29. Irs forms 1040 See the Instructions for Form 1040 to figure your deduction. Irs forms 1040 The following special rules apply to the self-employed health insurance deduction. Irs forms 1040 You cannot take a medical expense deduction on Schedule A (Form 1040) for any expenses you claim for purposes of the self-employed health insurance deduction. Irs forms 1040 You cannot take the deduction for any month you are eligible to participate in a subsidized plan of your (or your spouse's) employer. Irs forms 1040 The deduction cannot exceed your net earnings from the business under which the insurance plan is established. Irs forms 1040 Your net earnings under this rule do not include the income you earned as a common-law employee (discussed earlier) of a church. Irs forms 1040 More information. Irs forms 1040   For more information about the self-employed health insurance deduction, see chapter 6 in Publication 535. Irs forms 1040 Deduction for SE Tax You can deduct one-half of your SE tax in figuring adjusted gross income. Irs forms 1040 This is an income tax deduction only, on Form 1040, line 27. Irs forms 1040 Do not claim this deduction in figuring net earnings from self-employment subject to SE tax. Irs forms 1040 Income Tax Withholding and Estimated Tax The federal income tax is a pay-as-you-go tax. Irs forms 1040 You must pay the tax as you earn or receive income during the year. Irs forms 1040 An employee usually has income tax withheld from his or her wages or salary. Irs forms 1040 However, your salary is not subject to federal income tax withholding if both of the following conditions apply. Irs forms 1040 You are a duly ordained, commissioned, or licensed minister, a member of a religious order (who has not taken a vow of poverty), or a Christian Science practitioner or reader. Irs forms 1040 Your salary is for ministerial services (see Ministerial Services , earlier). Irs forms 1040 If your salary is not subject to withholding, or if you do not pay enough tax through withholding, you may need to make estimated tax payments to avoid penalties for not paying enough tax as you earn your income. Irs forms 1040 You generally must make estimated tax payments if you expect to owe taxes, including SE tax, of $1,000 or more, when you file your return. Irs forms 1040 Determine your estimated tax by using the worksheets in Publication 505, Tax Withholding and Estimated Tax. Irs forms 1040 Pay the entire estimated tax for 2014 or the first installment by April 15, 2014. Irs forms 1040 See Form 1040-ES for the different payment methods. Irs forms 1040 The April 15 date applies whether or not your tax home and your abode are outside the United States and Puerto Rico. Irs forms 1040 For more information, see chapter 2 of Publication 505. Irs forms 1040 If you perform your services as a common-law employee of the church and your salary is not subject to income tax withholding, you can enter into a voluntary withholding agreement with the church to cover any income and SE tax that may be due. Irs forms 1040 Filing Your Return You must file an income tax return for 2013 if your gross income was at least the amount shown in the third column of Table 4 above. Irs forms 1040 Table 4. Irs forms 1040 2013 Filing Requirements for Most Taxpayers IF your filing status is . Irs forms 1040 . Irs forms 1040 . Irs forms 1040 AND at the end of 2013 you were* . Irs forms 1040 . Irs forms 1040 . Irs forms 1040 THEN file a return if your gross income** was at least . Irs forms 1040 . Irs forms 1040 . Irs forms 1040 single under age 65 65 or older   $10,000 $11,500   married filing jointly*** under 65 (both spouses) 65 or older (one spouse) 65 or older (both spouses)   $20,000  $21,200  $22,400   married filing separately any age   $3,900   head of household under 65 65 or older   $12,850 $14,350   qualifying widow(er) with dependent child under 65 65 or older   $16,100  $17,300   * If you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Irs forms 1040 ** Gross income means all income you received in the form of money, goods, property, and services that is not exempt from tax, including any income from sources outside the United States or from the sale of your main home (even if you can exclude part or all of it). Irs forms 1040 Do not include any social security benefits unless (a) you are married filing a separate return and you lived with your spouse at any time in 2013, or (b) one-half of your social security benefits plus your other gross income and any tax-exempt interest is more than $25,000 ($32,000 if married filing jointly). Irs forms 1040 If (a) or (b) applies, see the instructions for Form 1040, lines 20a and 20b, to figure the taxable part of social security benefits you must include in gross income. Irs forms 1040 Gross income includes gains, but not losses, reported on Form 8949 or Schedule D (Form 1040). Irs forms 1040 Gross income from a business means, for example, the amount on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Irs forms 1040 But, in figuring gross income, do not reduce your income by any losses, including any loss on Schedule C (Form 1040), line 7, or Schedule F (Form 1040), line 9. Irs forms 1040 *** If you did not live with your spouse at the end of 2013 (or on the date your spouse died) and your gross income was at least $3,900, you must file a return regardless of your age. Irs forms 1040 Additional requirements. Irs forms 1040   Even if your income was less than the amount shown in Table 4, you must file an income tax return on Form 1040, and attach a completed Schedule SE (Form 1040), if:    You are not exempt from SE tax, and you have net earnings from self-employment (discussed earlier under Self-Employment Tax: Figuring Net Earnings ) of $400 or more in the tax year, You are exempt from SE tax on earnings from ministerial services and you have $400 or more of other net earnings subject to SE tax, or You had wages of $108. Irs forms 1040 28 or more from an electing church or church-controlled organization (see Coverage of Religious Workers (Church Employees) , earlier, under Social Security Coverage). Irs forms 1040 Self-employment tax. Irs forms 1040   If you are liable for SE tax, you must file Schedule SE (Form 1040) with your return. Irs forms 1040   If you filed Form 4361 and did not receive approval from the IRS, you must pay SE tax on your ministerial earnings, as explained earlier. Irs forms 1040 You should report ministerial earnings and expenses from nonemployee ministerial services on Schedule C or C-EZ (Form 1040). Irs forms 1040 You should then carry the net amount over to line 2 of Schedule SE (Form 1040), Section A or B. Irs forms 1040 However, if you were a duly ordained minister who was an employee of a church and you must pay SE tax on the wages you earned for those services, do not report those wages on Schedule C or C-EZ (Form 1040). Irs forms 1040 Instead, report those wages less any allowable expenses (including any unreimbursed employee business expenses), on line 2 of Schedule SE (Form 1040), Section A or B, and attach an explanation. Irs forms 1040 Note. Irs forms 1040 For income tax purposes, the unreimbursed employee business expenses that you incurred as an employee of the church and subtracted from your wages on line 2 of Schedule SE (Form 1040) are allowed only as an itemized deduction on Schedule A (Form 1040) if they exceed 2% of your adjusted gross income. Irs forms 1040 You cannot deduct these expenses on Schedule C or C-EZ (Form 1040) as a trade or business expense. Irs forms 1040 Exemption from SE tax. Irs forms 1040   If you filed Form 4361 and received IRS approval not to be taxed on your ministerial earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Irs forms 1040 Instead, enter “Exempt—Form 4361” on the dotted line next to Form 1040, line 56. Irs forms 1040 However, if you had net earnings from another trade or business of $400 or more subject to SE tax, see line A at the top of Schedule SE (Form 1040), Section B. Irs forms 1040    If you filed Form 4029 and received IRS approval not to be taxed on those earnings, and you do not have any other income subject to SE tax, do not file Schedule SE (Form 1040). Irs forms 1040 Instead, enter “Exempt—Form 4029” on the dotted line next to Form 1040, line 56. Irs forms 1040 More information. Irs forms 1040   For more information on filing your return, including when and where to file it, see the Instructions for Form 1040. Irs forms 1040 Retirement Savings Arrangements Retirement savings arrangements are plans that offer you a tax-favored way to save for your retirement. Irs forms 1040 You generally can deduct your contributions to the plan. Irs forms 1040 Your contributions and the earnings on them are not taxed until they are distributed. Irs forms 1040 Retirement plans for the self-employed. Irs forms 1040   To set up one of the following plans you must be self-employed. Irs forms 1040 SEP (simplified employee pension) plan. Irs forms 1040 SIMPLE (savings incentive match plan for employees) plan. Irs forms 1040 Qualified retirement plan (also called a Keogh or H. Irs forms 1040 R. Irs forms 1040 10 plan). Irs forms 1040   The common-law rules determine whether you are an employee or a self-employed person for purposes of setting up a retirement plan. Irs forms 1040 See Employment status for other tax purposes under Coverage of Members of the Clergy, earlier. Irs forms 1040 This result is true even if your compensation for ministerial services (defined earlier) is subject to SE tax. Irs forms 1040   For example, if a congregation pays you a salary for performing ministerial services and you are subject to the congregation's control, you generally are a common-law employee. Irs forms 1040 You are not a self-employed person for purposes of setting up a retirement plan. Irs forms 1040 This result is true even if your salary is subject to SE tax. Irs forms 1040   On the other hand, amounts received directly from members of the congregation, such as fees for performing marriages, baptisms, or other personal services that you report on Schedule C or C-EZ (Form 1040), are earnings from self-employment for all tax purposes. Irs forms 1040   For more information on establishing a SEP, SIMPLE, or qualified retirement plan, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Irs forms 1040 Individual retirement arrangements (IRAs). Irs forms 1040   The traditional IRA and the Roth IRA are two individual retirement arrangements you can use to save money for your retirement. Irs forms 1040 Generally, your maximum contribution for 2013 to either of these plans (or to a combination of the two) is the smaller of your taxable compensation or $5,500 ($6,500 if you are age 50 or older). Irs forms 1040   However, your maximum contribution to a Roth IRA will be further reduced or eliminated if your adjusted gross income is above a certain amount. Irs forms 1040 You cannot deduct Roth IRA contributions, but if you satisfy certain requirements, all earnings in the Roth IRA are tax free and neither your nondeductible contributions nor any earnings on them are taxable when distributed. Irs forms 1040   If you contribute to a traditional IRA, your contribution may be deductible. Irs forms 1040 However, your deduction may be reduced or eliminated if you or your spouse is covered by an employer retirement plan (including, but not limited to, a SEP, SIMPLE, or qualified retirement plan). Irs forms 1040   For more information on IRAs, see Publication 590. Irs forms 1040 Tax-sheltered annuity plans. Irs forms 1040   Church employees, members of religious orders, and duly ordained, commissioned, or licensed ministers working as ministers or chaplains can participate in tax-sheltered annuity (403(b)) plans. Irs forms 1040 For more
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Disaster Assistance and Emergency Relief for Individuals and Businesses

Overview

Special tax law provisions may help taxpayers and businesses recover financially from the impact of a disaster, especially when the federal government declares their location to be a major disaster area. Depending on the circumstances, the IRS may grant additional time to file returns and pay taxes. Both individuals and businesses in a federally declared disaster area can get a faster refund by claiming losses related to the disaster on the tax return for the previous year, usually by filing an amended return.

The IRS also offers audio presentations on Planning for Disaster. These presentations discuss business continuity planning, insurance coverage, recording keeping and other tips to stay in business after a major disaster.

Get the Latest Tax Relief Guidance in Disaster Situations
Recent special tax law provisions may help taxpayers recover financially from the impact of a major disaster in their location.

Preparing for Disasters
Are your home and/or business ready if a disaster strikes? Get information and suggestions on paperless recordkeeping, documenting assets and valuables, and emergency planning.

Help for Disaster Victims
This podcast provides information on what to do and who to contact if you have been affected by a disaster this year.

Help During Disasters
We know that major disasters and emergencies in your area will affect many families and businesses. While we hope you are spared any loss, we realize this may not be true for everyone, and we want to let you know how the IRS can help.

Around the Nation
This section of our Web site provides IRS news specific to local areas, primarily disaster relief or tax provisions that affect certain states.

Tax Topic 515 - Casualty, Disaster, and Theft Losses
Casualty losses can result from the destruction of or damage to your property from any sudden, unexpected, and unusual event such as a flood, hurricane, tornado, fire, earthquake or even volcanic eruption.

Disaster Assistance Self-Study
The Disaster Assistance Self-Study provides the basic information needed to assist taxpayers in a disaster. It provides the volunteer practitioner disaster representative member with information on distributing Disaster Kits, computing gains/losses as the result of a disaster, information about administrative tax relief and information about the psychological effects of a disaster on its victims.

For Individuals

FAQs for Disaster Victims
This section provides current information on disaster relief and frequently asked questions. The Hurricane Katrina FAQs are now listed separately from the general FAQs, which are applicable to any disaster.

Gulf Oil Spill: Questions and Answers
The existing law dictates whether payments received from BP for losses, damage and injuries are taxable. Refer to the Gulf Oil Spill technical questions and answers for more information.

Reconstructing Your Records
Reconstructing records after a disaster may be essential for tax purposes, getting federal assistance or insurance reimbursement. Records that you need to prove your loss may have been damaged or destroyed in a casualty. While it may not be easy, reconstructing your records may be essential.

Publication 2194, Disaster Resource Guide for Individuals and Businesses (PDF)
Publication 2194 is a Disaster Losses Kit to help individuals claim casualty losses on property that was destroyed by a natural disaster. The kit contains tax forms needed to claim a casualty loss. It also answers common questions like how to extend the time you need to file, how you can receive free tax services and how to identify which disaster losses to claim.

Help for Hurricane Victims: Information on Tax Relief, Charitable Issues
The Internal Revenue Service is working to provide appropriate relief and assistance to victims of Hurricanes Katrina, Rita and Wilma.

For Businesses

Publication 2194, Disaster Resource Guide for Individuals and Businesses (PDF)
Publication 2194 is a Disaster Losses Kit to help businesses claim casualty losses on property that has been destroyed by a natural disaster. The kit contains tax forms needed to claim a casualty loss.

Crop Insurance and Crop Disaster Payments - Agriculture Tax Tips
This section offers helpful tax tips including whether crop insurance and crop disaster payments are taxable.

Disaster Planning Video Presentations:

For Tax Professionals

Disaster Relief Resource Center for Tax Professionals
Through this resource center we address many of the questions received from tax professionals. We've included information published by the IRS, along with links to IRS partners who may offer additional assistance. Many of our partners have developed Web pages that highlight the efforts they've made to help their fellow practitioners to recover and get re-established.

For Charitable Organizations

Disaster Relief - Resources for Charities and Contributors
After a disaster or in another emergency hardship situation, people may be interested in using a charitable organization to help victims. The IRS provides a number of resources to help them accomplish this goal.

Publication 3833, Disaster Relief, Providing Assistance Through Charitable Organizations (PDF)
This publication describes how members of the public can use charitable organizations to provide assistance to victims of disasters or other emergency hardship situations.

Talk With the IRS

Contact My Local Office
IRS Taxpayer Assistance Centers are your one-stop resource for face-to-face tax help and solutions to tax problems, every business day.

Taxpayer Advocate Service
The Taxpayer Advocate is an independent organization within the IRS. They help taxpayers resolve problems with the IRS and recommend changes that will prevent the problems.

Other Government Agency Disaster Information

DisasterAssistance.gov
This is a one stop web portal that consolidates information from 17 US Government Agencies where taxpayers can apply for Small Business Administration loans through online applications, receive referral information on forms of assistance that do not have online applications, or check the progress and status of their applications online.

Federal Emergency Management Agency (FEMA)
Federal disaster aid programs provided by the Federal Emergency Management Agency (FEMA) are available to citizens affected by major disasters.

Small Business Administration (SBA)
The U. S. Small Business Administration (SBA) is responsible for providing affordable, timely and accessible financial assistance to homeowners, renters and businesses of all sizes located in a declared disaster area. Financial assistance is available in the form of low-interest, long-term loans for losses that are not fully covered by insurance or other recoveries.

READY.gov
Learn how individuals and business can prepare for and respond to all kinds of disasters and emergencies.

GovBenefits.gov
GovBenefits.gov wants to let survivors and disaster relief workers know about the many disaster relief programs available. Perhaps you have suffered damage to a home or business, lost your job, or experienced crop damage due to a natural disaster. GovBenefits.gov has a variety of national benefit and assistance programs geared toward disaster recovery

IRS Forms and Publications

Publication 547 – Casualties, Disasters and Thefts
Publication 547 explains how to treat casualties, thefts, and losses on deposits. It discusses definitions, how to figure gain or loss, how to treat reimbursements, and how to report them.

Form 1040X (PDF).

Publication 584 (PDF). Also available in HTML.

Publication 584B (PDF). Also available in HTML.

Publication 2194 (PDF).

Publication 3067 (EN/SP) (PDF).

Publication 3067 (EN/CN) (PDF)

Publication 3067 (EN/DE) (PDF)

Publication 3067 (EN/KR) (PDF)

Publication 3067 (EN/RU) (PDF)

Publication 3067 (EN/VN) (PDF)

Publication 3833 (PDF).

Page Last Reviewed or Updated: 21-Jan-2014

The Irs Forms 1040

Irs forms 1040 Index A Assistance (see Tax help) C Carryback period, When To Use an NOL Carryback, waiving, Waiving the Carryback Period Carryforward period, When To Use an NOL Carryover from 2012 to 2013 Estates and trusts, Estates and trusts. Irs forms 1040 Worksheet instructions, Worksheet Instructions Claiming an NOL deduction, How To Claim an NOL Deduction D Deducting a carryback, Deducting a Carryback Deducting a carryforward, Deducting a Carryforward Domestic production activities deduction, Domestic production activities deduction (line 23). Irs forms 1040 , Modified taxable income. Irs forms 1040 E Eligible loss, Eligible loss. Irs forms 1040 F Farming business, Farming business. Irs forms 1040 Farming loss, Farming loss. Irs forms 1040 Figuring an NOL Capital losses, Adjustments for capital losses (lines 19–22). Irs forms 1040 Carryover, How To Figure an NOL Carryover Form 1045, Schedule A, Form 1045, Schedule A. Irs forms 1040 NOL deduction, NOLs from other years (line 24). Irs forms 1040 Nonbusiness deductions, Nonbusiness deductions (line 6). Irs forms 1040 Nonbusiness income, Nonbusiness income (line 7). Irs forms 1040 Filing status, change in, Change in Filing Status Form 1045, Schedule A, Form 1045, Schedule A. Irs forms 1040 Form 1045, Schedule B, Form 1045, Schedule B. Irs forms 1040 Forms and schedules Form 1040X, Form 1040X. Irs forms 1040 Form 1045, Form 1045. Irs forms 1040 Form 1045, Schedule A, Form 1045, Schedule A. Irs forms 1040 Form 1045, Schedule B, Form 1045, Schedule B. Irs forms 1040 Free tax services, Free help with your tax return. Irs forms 1040 Future developments, Reminders H Help (see Tax help) How to carry an NOL back or forward, How To Carry an NOL Back or Forward How to figure an NOL, How To Figure an NOL I Illustrated forms and schedules Form 1045, Illustrated Form 1045 Form 1045, Schedule A, Illustrated Form 1045, Schedule A Form 1045, Schedule B, Form 1045, Schedule B. Irs forms 1040 M Marital status, change in, Change in Marital Status Missing children, photographs of, Reminders Modified taxable income, Modified taxable income. Irs forms 1040 N NOL resulting in no taxable income, NOL resulting in no taxable income. Irs forms 1040 NOL year, Introduction, NOL year. Irs forms 1040 P Publications (see Tax help) Q Qualified disaster loss, Qualified disaster loss. Irs forms 1040 Qualified small business, Qualified small business. Irs forms 1040 R Refiguring tax, Refiguring your tax. Irs forms 1040 S Specified liability loss, Specified liability loss. Irs forms 1040 Steps in figuring NOL, NOL Steps T Tax help, How To Get Tax Help W Waiving the 10-year carryback, Waiving the 10-year carryback. Irs forms 1040 Waiving the 5-year carryback, Waiving the 5-year carryback. Irs forms 1040 Waiving the carryback period, Waiving the Carryback Period When to use an NOL, When To Use an NOL Worksheet (Continued), Carryover from 2012 to 2013, Prev  Up     Home   More Online Publications