Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

This answer was rated:

An ordained minister works as a full time w2 employee for…

An ordained minister works as...
An ordained minister works as a full time w2 employee for his Church. The priest is covered under a defined benefit retirement plan. The priest, while still active, creates a partnership LLC with another priest. They provide part time consulting services to other Church’s within the diocese (same employer). The Church allows the partner to contribute a monthly fixed amount of his LLC income to the Church’s defined benefit retirement plan which will result in a slightly higher pension benefit for the minister upon retirement. That fixed contribution amount is based on the LLC making $XX in gross income. Assuming the LLC produces $XX, is this fixed monthly contribution to the Church’s pension plan deductible on the partner’s K-1?
Show More
Show Less
Ask Your Own Tax Question
Answered in 11 minutes by:
7/28/2017
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,430
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. My name's Lane

...

NO, for contributions to a qualified plan for a partner is made BY the partnership, (and should be based on net self employment income) but is deducted on the 1040 of the partner.

...

Since a partner doesn't actually receive a salary from the partnership, retirement plan contributions on behalf of each partner, again, are based on his or her net self-employment (SE) income from the partnership. This is the amount used to calculate the partner's SE tax bill, reduced by his or her deduction for 50 percent of SE tax attributable to income from the partnership. The partner's deduction for 50 percent of SE tax, as you likely know, is reported on page 1 of his or her Form 1040.

...

So, although there is an informational entry on the K-1, Deductible retirement plan contributions made on behalf of a partner (including any elective deferral contributions made by the partner) are not deducted on the partnership's Form 1065 tax return. The deductible contribution amounts are then written off on page 1 of the partner's individual Form 1040 tax return.

...

This amount is reported on Form K-1, line 14 (code A)

Ask Your Own Tax Question

Please let me know if you have ANY questions at all, before rating me.

If this has helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

I hope that you’ll rate me based on my accuracy and thoroughness, rather than any good news/bad news content.

That’s the only way JustAnswer.com will compensate me for the work here.

Thanks,

Lane

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice on three continents since 1986.

Ask Your Own Tax Question
Customer reply replied 10 months ago
Thank you, ***** ***** the deduction would be shown on the K-1 for informational purposes but deducted on the 1040 (line 28?) Makes sense, but if that is the case, I believe it has to be contributed to a SEP, Keogh, 401K, etc. Not sure if the Church pension plan is a qualified plan even though they have agreed to take his contribution.

That's right. Line 28. And the k-1 entry is informational (letting the taxpayer know what amount to use on the 1040.

...

Actually, a separate SEP or other plan is not allowed for partners.

...

http://hr.cch.com/news/pension/070111a.asp

...

This is likely why the church plan agreed

Ask Your Own Tax Question

Actually, as I think about this, the prohibition from separate SEP'S is in the situation where there is already a plan FOR the partnership.

...

Here, the SEP or other plan would BE the LLC's plan (and only plan)

...

You are correct

Ask Your Own Tax Question
Customer reply replied 10 months ago
OK - so it looks like this would not be a deduction. That explains why my tax software is not allowing this on the 1040 unless I override which I would never do. I will disallow the deduction and once again I appreciate you "clearing my head". Thanks.

You're very welcome ... Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …is thanks enough!

That's the only way I'll be compensated by JustAnswer for the work here

...

Thank you,

Lane

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,430
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
Ask your own question now
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,430
14,430 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

Lane is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,567 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
Can I deduct Goodwill, Trade Name, Non Compete Clause
Can I deduct Goodwill, Trade Name, Non Compete Clause against the gross sales price of my business? … read more
Lane
Lane
JD, CFP, MBA, CRPS
14,430 satisfied customers
I have LLC and my gross income for over 10 years is around
Hello , I have LLC and my gross income for over 10 years is around 50k after deduction expenses my income is around 11k . I went to see my ssn statement and there is no evidence of any income . does t… read more
James Daloisio
James Daloisio
Attorney
Doctoral Degree
351 satisfied customers
I submitted my 2017 Form 1040 with an incorrect SSN on page
I submitted my 2017 Form 1040 with an incorrect SSN on page 1 of the Form . The IRS responded with a cp24 notice that adjusted both my AGI and tax due to $0.00 and also a check for the full total of a… read more
Lane
Lane
JD, CFP, MBA, CRPS
14,430 satisfied customers
If a non-profit organization is created and sponsors an
If a non-profit organization is created and sponsors an event, like a wine fair, does it have to pay taxes on the income if it is not a 501(c)? (The income would be used as working capital for the fol… read more
Lane
Lane
JD, CFP, MBA, CRPS
14,430 satisfied customers
Can a private individual invest in a non-profit organization
Can a private individual invest in a non-profit organization in the state of Iowa … read more
Lane
Lane
JD, CFP, MBA, CRPS
14,430 satisfied customers
VA form asks for adjusted gross income (disability form). We
VA form asks for adjusted gross income (disability form). We file joint; can we separate his income from mine for the form? How? … read more
emc011075
emc011075
Tax advisor and Enrolled Agent
Bachelor\u0027s Degree
3,033 satisfied customers
IRS Tax Question: What are the retirement plan options for
IRS Tax Question: What are the retirement plan options for somebody with an S-Corp where they are the sole employee? What happens when the decide to hire employees? Please provide very good IRS refere… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,263 satisfied customers
Filed form 1040 form took the standard deduction, I am now
filed form 1040 form took the standard deduction, I am now filing the new york state, … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
On form 1040, line 27, what is the deductible part of the
On form 1040, line 27, what is the deductible part of the self-employment tax requiring schedule SE?… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,263 satisfied customers
On form 1040 line4 21 other income. is this where i should
on form 1040 line4 21 other income . is this where i should enter an amount shown from my pensiopn payments form 1099R … read more
Cole Parker
Cole Parker
Principal/CPA
Bachelor\u0027s Degree
111 satisfied customers
Can i deduct medicare and secondary insurance premiums as a
can i deduct medicare and secondary insurance premiums as a medical expense on my az 140 schedule A form? … read more
ABC Accounting Group
ABC Accounting Group
Bachelor\u0027s Degree
842 satisfied customers
My adjusted gross income is $13,539. $8560 from a pension
My adjusted gross income is $13,539. $8560 from a pension from my ex-husband, $14204 from SS and $4706 from a bank I retired from which I will no longer be receiving. Do I need to pay taxes on my Soc … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am a small employer with a sec 125 plan. Can I deduct the
I am a small employer with a sec 125 plan. Can I deduct the health prem for myself or only my employee on the business return (sched C)? … read more
Lane
Lane
JD, CFP, MBA, CRPS
14,430 satisfied customers
Retirement/Plan Tax Question: Taxpayer has an LLC consulting
Retirement/Plan Tax Question: Taxpayer has an LLC consulting partnership. TP also has been and continues to be a W2 employee (minister) of large well-established denomination. TP's LLC is related, but… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I want to ask a question about Income tax return form 1040..
Hello I want to ask a question about Income tax return form 1040.. I want to fill form but My wife doesnt have any ssn number. She is housewife and she has no income. Which option should I choose from… read more
James Daloisio
James Daloisio
Attorney
Doctoral Degree
351 satisfied customers
I have S corp. and LLC. How will the new tax law benefit
I have S corp. and LLC. How will the new tax law benefit these corporations. I am hearing that C Corps will be taxed at 21%. Do S and LLC's get any benefit? … read more
Lane
Lane
JD, CFP, MBA, CRPS
14,430 satisfied customers
An llc gets income as a non employee to complete work for
An llc gets income as a non employee to complete work for another company. Is that taxable income? … read more
Lane
Lane
JD, CFP, MBA, CRPS
14,430 satisfied customers
On line 37 my 2015 Form 1040 I had an adjusted gross income
On line 37 my 2015 Form 1040 I had an adjusted gross income of $291,546. on my Amended 1040X for 2015 I have taxable income of $179,542. How do I get proof of this to get an adjusted MAGI to give to M… read more
Barbara
Barbara
Enrolled Agent, Paralegal
5,263 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x