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Where to record car interest loan of a priest use in business

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last updated ‎December 07, 2019 12:44 AM

can I record the interest expense on car loan under the miscellaneous instead of creating schedule c just to record it. The priest is a employee of the church but as a self-employed

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Highlighted
Level 15
last updated ‎December 07, 2019 12:44 AM

The short answer is no, your client cannot deduct car loan interest.

Clergy who receive W-2 are still common law employees although they are subject to SE-tax because the tax code bifurcate on the treatment for purposes of §1401, based on the carved out definition in §1402.

Business use of car (but not car loan interest) would normality be deductible, subject to 2% floor, if not for TCJA and even then, it would need to be reduced in relation to parsonage excluded, if any.

In case he has other self-employment income for services he performed in capacities other than as an employee of the church, nevertheless, business use of car to the extent it was related to that trade or business may be deductible on Sch C.

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Highlighted
Level 15
last updated ‎December 07, 2019 12:44 AM

The short answer is no, your client cannot deduct car loan interest.

Clergy who receive W-2 are still common law employees although they are subject to SE-tax because the tax code bifurcate on the treatment for purposes of §1401, based on the carved out definition in §1402.

Business use of car (but not car loan interest) would normality be deductible, subject to 2% floor, if not for TCJA and even then, it would need to be reduced in relation to parsonage excluded, if any.

In case he has other self-employment income for services he performed in capacities other than as an employee of the church, nevertheless, business use of car to the extent it was related to that trade or business may be deductible on Sch C.

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Still an AllStar

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Level 12
last updated ‎December 07, 2019 12:44 AM
But don't clergy expenses reduce SE tax?
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