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JBTT0183
New Member

Turbo tax is not allowing the wages for Clergy with 4361 when computing EIC

I am a member of the clergy.  My employer reported my wages on a 1099-NEC.

 

I have wages and a housing allowance, and I have an IRS approved 4361 (exempt from SE tax).  But using Turbo Tax desktop, as soon as I click "I am exempt from Self-Employment Tax - I've Filed Form 4361) it immediately removes my wages from the EIC worksheet.

 

It is in the Business and Expenses section, and it happens right after selecting business code 813000

 

How do I get around this?

 

The publication 517 clearly describes the computation of EIC for clergy.  See page 12 under EIC.

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1 Reply
DianeW777
Expert Alumni

Turbo tax is not allowing the wages for Clergy with 4361 when computing EIC

It depends.  There are two sets of explanation for you in Publication 517, page 12.  The real issue is that you do not have a W-2, which is required to be issued by the church, if you are working for them. They issued you a 1099-NEC which indicates self employment and this eliminates the earnings from being included for the earned income tax credit because of the Form 4361 exemption.

 

First see number 2. under earned income, then the note below it.

Net earnings from self-employment that are not exempt from SECA (you don't have an approved Form 4029 or 4361) that you report on Schedule SE (Form 1040), line 3, with the following adjustments. a. Subtract the amount you claimed (or should have claimed) on Schedule 1 (Form 1040), line 15, for the deductible part of your SE tax. b. Add any amount from Schedule SE (Form 1040), line 4b and line 5a.

 

If you are a minister and have an approved Form 4361, your earned income will still include wages and salaries earned as an employee, but it will not include amounts you received for nonemployee ministerial duties, such as fees for performing marriages and baptisms, and honoraria for delivering speeches.

 

Please update here if you have more questions.

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