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Does Clergy Income (reported on a W2 where the Clergy must pay self-employment tax) qualify for the QBI deduction? The clergy works at a church.

jesusmac2000
Level 2
 
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itonewbie
Level 15

Many a time, clergy and ministers are common law employees of religious organizations to which they belong, as determined by various factors used by the IRS and the courts.  That's also why these individuals are issued W-2's, notwithstanding side gigs they may have in some other capacities and the fact that §1402 has a special provision just for the purpose of SE-tax.

On that basis, compensation reported on W-2 is income received for the trade and business of being an employee and should not be eligible for QBI.

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itonewbie
Level 15

Many a time, clergy and ministers are common law employees of religious organizations to which they belong, as determined by various factors used by the IRS and the courts.  That's also why these individuals are issued W-2's, notwithstanding side gigs they may have in some other capacities and the fact that §1402 has a special provision just for the purpose of SE-tax.

On that basis, compensation reported on W-2 is income received for the trade and business of being an employee and should not be eligible for QBI.

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Still an AllStar

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Marc-TaxMan
Level 8

Are you a paid pro?  What does your continuing ed say about w-2 employee and QBI?

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Skylane
Level 8
Level 8

@Mt Juliet CPA  

Eddie, you have any insights? 

If at first you don’t succeed…..find a workaround
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Skylane
Level 8
Level 8
@Marc.TaxMan    Based on his question I'd say he was paid.........  what does your continuing education say about statutory employees and/or clergy?
If at first you don’t succeed…..find a workaround
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Marc-TaxMan
Level 8
It's not my client, so I'm not doing the research!  But the 199A Regs would be my starting point
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