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My wife works for a church as a director and it gives a

My wife works for...

My wife works for a church as a director and it gives a $23,000 housing allowance and 45000 as salary but does not with hold any FICA and we missed paying last year due to a missed form in turbo tax and We go back and file now what are the penalties and how can we mitigate them.

Accountant's Assistant: Because real estate law varies from place to place, can you tell me what state this is in?

Not a real estate question

Accountant's Assistant: Has anything been filed or reported?

Yes all of our other info for 2016, the miss was in 2016 not filing the form SE

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3/12/2018
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,997
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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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, to clients on three continents, since 1986.

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YOu simply need to file the Schedule SE as quickly as possible, if she's treated as a self-employed individual.

...

You said "salary," but I'm guessing that you mean independent contractor income.

...

If she DID receive a W-2 (such that she is being treated as an employee) first, of all, the church SHOULD be withholding 1/2 of the SS & Medicare and then matching the other 1/2 (7.65 + 7.65) = 15.35 ... but ORS will say that the tax is still the ultimate responsibility of the taxpayer, and you can use this form to pay-in:https://www.irs.gov/pub/irs-pdf/f8919.pdf

...

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If the church provides a W-2, then they church will be responsible for an late filing and payment penalties.

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If she's self-employed, then you can attach cover letter and ask for what's called first time abatement.

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See this:https://www.irs.gov/businesses/small-businesses-self-employed/penalty-relief-due-to-first-time-penalty-abatement-or-other-administrative-waiver

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Hi,

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I’m just checking back in to see how things are going.

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

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Customer reply replied 1 month ago
no she is not an independent contractor. She is a salaried employee the church is exempt from paying the employer side of FICA. So the first question is, does she then have to pay the employer side of FICA? Does she have to pay the personal side of FICA? Does she have to pay any FICA?
Customer reply replied 1 month ago
The church is not withholding any FICA either at this time.

Yes, she needs to pay the employee portion of Social Security and Medicare if he employer does not withhold.

...

See this from IRS (here: https://www.irs.gov/compliance/criminal-investigation/employer-and-employee-responsibilities-employment-tax-enforcement)

...

...

"Employees who do not have taxes withheld nor remit them personally, are still liable for these taxes and may not qualify for Social Security, Medicare, or unemployment benefits."

"... In addition, if the employer refuses to withhold employment taxes from these wages and the IRS is unable to collect the employment taxes from the employer, the employee still has the responsibility to pay income tax and is ultimately responsible for his/her share of the FICA tax."

...

Here's the form you'll need: https://www.irs.gov/pub/irs-pdf/f8919.pdf

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Customer reply replied 1 month ago
34;... In addition, if the employer refuses to withhold employment taxes from these wages and the IRS is unable to collect the employment taxes from the employer, the employee still has the responsibility to pay income tax and is ultimately responsible for his/her share of the FICA tax." (AND THE EMPLOYER PORTION IF THEY ARE EXEMPT FROM PAYING FICA??)
Customer reply replied 1 month ago
if the employer does not pay employer portion since they say they are exempt, nor withhold employee FICA portion, she is responsible for Her portion = 7.65%
OR
Her Portion AND the employer portion ie aprox 15%?

No HER portion, 7.65%

...

"... the employee still has the responsibility to pay income tax and is ultimately responsible for his/her share of the FICA tax."

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,997
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
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Customer reply replied 1 month ago
OK cool ty

You're very welcome. Thank for the rating.

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Customer reply replied 1 month ago
Can I extend this discussion
Customer reply replied 1 month ago
On the form you sent, non of the reason codes apply, I cant send form SS-8 before my 1040 is filed as it is already past. What should I do?
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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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