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Test Your Tax Knowledge
By JLP | September 12, 2005
I mentioned earlier that I’m taking a tax class from H & R Block. Well, here’s a chance for you to test your tax knowledge. This is a research question that was in my reading for today:
“A member of a religious order has taken a vow of poverty. He is directed by the order to perform work in an institution associated with the church. Because he has renounced his claim to any earnings, he surrenders his wages to the order. Are these wages included in his gross income?”
Does anybody know the answer and where to find it. Just so you know, I already know the answer.
Topics: Miscellaneous, Taxes | 2 Comments »
September 13th, 2005 at 8:11 am
http://www.irs.gov/taxtopics/tc417.html
http://www.irs.gov/taxtopics/tc401.html
OK, I’ll take a stab at this: Yes, this is earned income
and will be taxed. He should receive a W-2 for his earnings.
Then he can claim a charitable deduction for the amount he
returned to the order – up to the limit (limited to offsetting
50% of his earned income???) Topic 417 (above link) applies if
he is a clergy member and topic 401 if he is not.
September 14th, 2005 at 10:24 am
Straight from Publication 17….
If your order directs you to perform services for another agency of the supervising church or an associated institution, you are considered to be performing the services as an agent of the order. Any wages you earn as an agent of an order that you turn over to the order are not included in your income.