@hjw77 wrote:
Is there anyway I can amend the 2024 tax to include Schedule SE so that the correct amount of the SECA taxes can be “moved/reassigned” from the already withheld Federal income tax to cover my SECA liability?
When I tried the Amend function in TurboTax, the only option I could find is changing my choice of the above mentioned TurboTax interview question “How should we calculate these taxes?” to “Pay self-employment tax on my wages and housing allowance.” But my question is: since I already had my SS & Medicare taxes withheld along with my Federal income tax, will this option calculate more SECA taxes than I should pay?
You did not have social security and medicare tax withheld. If you did, you would have those amounts in boxes 4 and 6. The employer simply withheld extra federal income tax.
Yes, that extra withholding is applied to your SECA if you file properly. You have one tax return with one tax bill--the sub-taxes are calculated separately but added together at the end.
You need to file an amended return to report that you need to pay SE tax on wages plus housing allowance. You will owe a lot more than you did before, but that will be the correct amount. Suppose your wages were $50,000, and your housing allowance was $20,000. Your federal income tax might be about $5000 if you are single. It sounds like you would have had more than $13,000 withheld (12% plus 15%), resulting in a substantial refund. If filed correctly, you would have calculated $5000 of income tax and $8000 of SECA, resulting in no refund. If you got that large refund, you have to pay it back, which will put you where you should have been.
And you probably owe more. In my example above, you pay about 12% federal income tax on $50,000, but you pay 15% SECA on $70,000 (wages plus housing allowance). If you only had 15% extra federal withholding on the wages, you will owe the 15% SECA on the housing allowance as an additional payment.
Because you will owe a large amount with the amended return, you may receive a notice for penalty and interest, back-calculated to April 15, 2025 (the 2024 deadline). Combined the penalty and interest is about 1-1.5% per month of the amount owed. But when you get the notice, you can apply for a waiver for cause.
https://www.irs.gov/payments/penalty-relief
I am more or less an expert here on clergy taxes, was a church treasurer for years. Feel free to post back any followup questions. We can also talk about best practices going forward.
