timing of social security allowance

by Eileen
(Des Moines, IA)

Ok, please bear with me as I'm really not too bright about all this tax stuff, but here goes.....our church has always given us an allowance (just one big check) to help us pay the self-employed income tax/social security, and of course this amount has always been included in the wages, tips, compensation, etc. on the W2. Also, rather than making quarterly tax payments, my husband and I opt to take the small penalty and wait until tax time to pay the whole amount. Therefore, our church treasurer has not really gotten around to giving us this allowance check until the new tax year, instead of giving smaller allowances throughout the previous year. So, we were given a check of X amount in 2011, as our social security allowance, and this compensation had been reflected on the 2010 W2. Are we then supposed to be taxed on this amount AGAIN for the 2011 tax year, just because the actual check was handed to us in 2011, rather than in 2010 when it had already been taxed? Our new accountant seems to think so, and she drew up a W2 accordingly.

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Mar 02, 2012
Pastor Benefits
by: Anonymous

Money for social security is income and is included in box 1, unlike the housing allowance which put in box 14 on the w-2. It is my understanding that allowance should be included in "paychecks" exspecially as housing allowance can not be backdated, and social security should be piad quarterly by the employee if they are not exempt. Even if the employee decides to just file at the end of the year. The IRS is very clear on housing allowances and you can go to http://www.irs.gov/pub/irs-pdf/p15a.pdf page 10. for taxes given as a benefit got to http://www.irs.gov/pub/irs-pdf/p15b_11.pdf page 28 which states "You can change the period as often as you like as long as you treat all of the benefits provided in a calendar year as paid no later than December 31 of the calendar year" and page 29 gives a bit more detail. Hope this helps

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