@KL47 wrote:
Thanks for your reply as I am so last minute trying to finish the tax return. One more question on ministers for self employment tax. I was asked/prompted to make adjustments to enter ministerial business expense that will deduct under the Job-related Expenses topic, the amount I entered will reduce the income that is subject to self employment tax. Am I allow to enter these expenses?
Can I include health insurance premium I paid for medical and dental insurance for myself, my spouse and my dependents in the above Job related expenses deduction?
Thanks,
I strongly recommend reading this guide. You may want to subscribe to the web site, they are very good. It sounds like you are new, and there a lot you will need to know about clergy taxes and finances.
https://data.efca.org/files/view/2088
Especially, because taxes were not withheld (this is normal) you should have been making estimated tax payments to the IRS each quarter. If you did not, you will not only owe a large lump sum of taxes now, you may be assessed a penalty for underpayment. (You can ask for a waiver for cause or if this is your first time, based on not knowing the rules, but you need to be making estimated payments ahead of your 2024 taxes too.)
Note that Turbotax DOES NOT automatically tax the housing allowance from box 14. After entering your W-2, you must check the box for "religious wages" in the list of special circumstances. Enter your housing allowance there, and also enter your qualified housing expenses. You can't enter a larger number than your housing allowance. If you enter a smaller number, because your allowance was more than your qualified expenses, the difference is added to your taxable income.
Unreimbursed employee business expenses are not deductible on your federal tax return. You may enter such expenses, because they might be deductible in your state. However, you must reduce your expense deduction according to the Deason rule. This means you can't fully deduct your expenses if some part of your compensation is a non-taxable housing allowance. For example, suppose your W-2 box 1 wages are $20,000 and your housing allowance is $30,000. Because only 40% of your total compensation is taxable, you can only list 40% of your expenses as deductible expenses. You must make this calculation yourself, the program does not do it for you.
You can also enter your unreimbursed business expenses as an adjustment to income on schedule SE, this will reduce your self-employment tax, and this is still allowed even though the regular itemized deduction for business expenses is not allowed. In the past, the only way to enter this expenses on schedule SE was to make a manual entry in Forms mode, which is only available when using Turbotax installed on your own computer from a CD or download (the desktop version), and not in Turbotax online. I heard a rumor that you can now enter these expenses in the online interview, but I have not checked this personally. Here also, your expenses must be reduced by the percentage of non-taxable compensation.
Your health insurance is not allowed as a business expense, because you are not considered self-employed for this purpose and you don't have a schedule C. Instead, you may be eligible for a premium credit under the affordable care act. You will enter this in the section for deductions and credits in the personal income section.
