Severance Pay

by Jay
(Washington)

I recently resigned from a church as the Pastor. The church gave me 2 months severance pay. They recently sent a 1099-misc form for the severance. I have been exempt from SE taxes because of my 4361 tax exemption.


My question is when I enter the 1099-misc in Turbo Tax it still makes me pay SE taxes and doesn't allow me to be exempt from it.

Am I misunderstanding something or is it a program error?

Please help

Answer

According to the instructions on IRS Form 4361.

"Only earnings from ministerial services are exempt from self-employment tax."

Your severance pay may not fall under that category.

I would either call the IRS or consult a tax professional




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