You may be able to take either a credit for foreign tax or an
itemized deduction for those taxes. Taken an a deduction, foreign income taxes
reduce your U.S. taxable income. Taken as a credit, foreign taxes reduce your
U.S. tax liability. In most cases it would be to your advantage to take foreign
taxes as a tax credit because of the many options this action give you.
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Complete a tax return:
You will need
IRS Publication 517 to complete this
seminar.
Please answer the following as accurately as possible.
1. Your earnings that are
not from the exercise of your ministry may be subject to social security tax
under FICA or SECA according to the rules that apply to taxpayers in general.
True
False
2. Church employees,
members of religious orders, and duly ordained, commissioned, or licensed
ministers workings as ministers or chaplains cannot participate in tax-sheltered
annuity 403(b) Plans.
True
False
3. Social security and Medicare taxes are collected under the
A.
Self-Employment Contributions Act (SECA).
B.
Federal Insurance Contributions Act (FICA).
C.
Medicare Contributions Act (MECA).
D.
Either A or B above.
4. The services you perform in the exercise of your ministry are
covered by social security and Medicare under SECA. Your earnings for these
services are subject to self-employment (SE) tax unless
A. You
are a member of a religious order that has taken a vow of poverty.
B. You
ask the Internal Revenue Service (IRS) for an exemption from SE tax for your
services and the IRS approves your request.
C.
You are subject only to the social security laws of a foreign country under the
provisions of a social security agreement between he United States and that
country.
D. Any
of the above.
5. Anyone licensed or commissioned as a minister must be able to
perform substantially all the religious functions of an ordained minister to be
treated as a minister for social security purposes.
True
False
6. Churches and qualified church-controlled organizations (church
organizations) that are opposed to religious reasons to the payment of social
security and Medicare taxes
A. Must
still pay social security and Medicare tax (SECA).
B. Can
elect to exclude their employees from FICA coverage.
C.
Can take an election to exclude their employees from paying SE tax on those
wages.
D.
Both B and C above.
7. You can request an exemption from SE tax if you
A. Are
a minister or a Christian Science practitioner.
B. Are
a member of a religious order who has taken a vow of poverty.
C.
Elected to be covered under social security by filing Form 2031.
D.
Any of the above.
8. To claim the exemption form SE tax, you must meet the
following condition.
A. You
must file Form 4361.
B.
You are conscientiously opposed to public insurance because of your general
conscience.
C.
You file for economic reasons.
D.
All of the above.
9. To request exemption from SE tax, file Form 4361 in
triplicate with the IRS. File Form 4361 by the date your income tax return is
due, including extensions, for the second tax year in which you have net
earnings from self-employment of
A. At
least $100.
B. At
least $600.
C. At
least $400.
D.
More than $5,000.
10. If you are 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 benefits or payments based on your wages or
self-employment income.
True
False
11. Most services you perform as a minister, priest, rabbi, etc.,
are qualified services such as
A.
Performing sacerdotal functions.
B.
Conducting religious workshops.
C.
Controlling, conducting, and maintaining religious organizations that are under
the authority of a religious body that is a church or denomination.
D.
Any of the above.
12. Income from services that are not qualified services is
generally subject to social security and Medicare tax withholding (not
self-employment tax) under the rules that apply to employees in general. The
following are qualified services.
A.
Services you perform for nonreligious organizations.
B.
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.
C.
The writing of religious books or articles for your ministry.
D.
Any of the above.
13. Include the following amount(s) in gross income when
figuring your net earnings from self-employment as a minister, member of a
religious order, Christian science practitioner, or church employee.
A. The rental value of a parsonage or a parsonage allowance provided to you.
B. Contributions by your church to a tax-sheltered annuity plan set up for you,
including any salary reduction contribution that are not included in your gross
income.
C. Pension payments or retirement allowances you receive for your past qualified
services.
D. None of the above.
14. When figuring your earnings from self-employment,
A. Deduct all your nonemployee ministerial expenses.
B. Deduct all you allowances unreimbursed trade or business expenses that you
incur in performing ministerial services as a common-law employee of the church.
C. Include in the net amount of A and B above on Schedule SE (Form 1040) section
A, line 2 or section B, line 2, with an attached explanation.
D. All of the above.
15. Ordained, commissioned, or licensed ministers of the gospel
may be able to exclude the rental allowance or fair market rental value of a
parsonage that is provided to them as pay for their services. 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 the amount is used to provide or rent a home and
A. The
amount you exclude is only slightly more than the fair market rental value of
the home, including furnishings and cost of utilities.
B.
The amount is not more than the reasonable pay for your services.
C.
The amount can be more than reasonable pay for your services as long as you are
a full-time minister.
D.
Any of the above.
16. If you are a religious organization employee and you own your
own home and you receive as part of your salary a housing or rental allowance,
you may exclude from gross income
A. The amount actually used to provide a home.
B. The amount officially designated as a rental allowance.
C. The fair market value of the home, including furnishings, utilities, garage,
etc.
D. The smallest of A, B or C above.
17. Your earnings may be exempt form both income tax and SE tax
if you are a member of a religious order who
A. Has taken a vow of poverty.
B. Receives earnings for services performed as an agent of the order and in the
exercise of duties required by the order.
C. Renounces the earnings and gives them to the order.
D. Any of the above.
18. 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.
True
False
19. If you are a self-employed minister, you may be able to
deduct the amount you paid in 2008 for medical and dental insurance and
qualified long-term care insurance for you, your spouse, and your dependents.
The following is true regarding the self-employed health insurance deduction.
A. The
deduction is allowed for months you are eligible to participate in a subsidized
plan of your (or your spouse's) employer.
B.
The deduction can exceed your net earnings from the business under which the
insurance plan in established.
C. The
expenses taken into account for purposes of this deduction are not allowed as a
medical expense deduction on Schedule A.
D. All
of the above.
20. The earned income credit is a credit for certain people who
work. Even if you do not owe tax, you can get a refund of the credit and you can
also get part of the credit added to your wages or salary instead of waiting
until after the end of the year. If you have earnings from qualified services
that are exempt from SECA, the following amounts are NOT considered earned
income.
A. Amounts you
receive for nonemployee ministerial duties.
B. Amounts you
receive for performing ministerial duties as an employee.
C. Any net
earnings from self-employment, minus one-half of your SE tax if you had
nonministerial duties.
D. Any
compensation received as an employee if you had nonministerial duties.
