Ministers and Taxes

Discussion in 'Money Talk$' started by Spinach, Dec 11, 2008.

  1. Spinach

    Spinach
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    Any experts out there?

    My Dad was a Pastor many moons ago. He paid primarily SECA----he had many children and never had to pay income tax, iirc. However, he only had to pay his social security/medicare (SECA) off what came through the church. Any gifts given to him in the form of a "Baptist handshake" were not taxed. It was a birthday or Christmas gift.

    Missionaries, however, are another story. I cannot speak for all missionaries and/or mission boards because I don't know of their policies. I can only speak for those of us who are through a clearing house style mission.

    My Mom only has one way to send me money for Christmas presents for the kids----my home mission. Then I must pay a tax (SECA) on the gift. I find this baffling. I'm not trying to be shady with the government and am all for paying taxes where taxes are due. However, it is really frustrating when my kids' birthday money is taxed.

    Am I understanding something incorrectly? Can someone else offer a perspective on this?
     
  2. Andy T.

    Andy T.
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    Cash gifts are considered taxable income to a minister. Not sure how to solve the problem with the money coming from your mom for Christmas. Talk to your board to see if there is something they can do.
     
  3. NaasPreacher (C4K)

    NaasPreacher (C4K)
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    Our missionary agency handles family gifts differently.

    When a family member gives a gift they do not get a tax receipt - those gifts are not tax deductible and hence not taxable They are listed separately on our statement as gifts.

    BTW - if your place of residence is outside the US your income up to about $80,000 is tax exempt. You must establish your foreign residence as your tax residence. This usually makes you liable for income tax in your country of residence, but I have found that much cheaper for me.

    You need to file a 1055EZ with your 1040.
     
    #3 NaasPreacher (C4K), Dec 11, 2008
    Last edited by a moderator: Dec 11, 2008
  4. Spinach

    Spinach
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    I knew about the $80,000 tax ceiling, but I was unaware about the gifts not being taxed if no tax receipt is given.

    Thank you!
     
  5. Jim1999

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    Countries do differ on how taxes are calculated. When I was in college, I worked with a mission in the USA. They could not pay me as a Canadian, so they sent a donation to the Bible College in my name to pay tuition, room and board an an allowance for books. It was not taxable...legally.

    Gifts for services such as funerals and weddings are not taxable, by law, in Canada. If the donation is made to the church as a payment for services,,,,a set fee...it is income to that church and subject to the tax laws......Go figure!

    My wife is an accountant and she wouldn't hear of me "cheating" the tax people.

    I owned property in England and paid property taxes, plus rented the house. I had to pay taxes on this money.

    When I left England, we could not bring all our money with us. It sat in an account in London and drew interest. I was not taxed on that money. We used that account when we returned home for visits.

    When we sold the house, I not only lost my vote in UK elections, I had to pay huge taxes on the monies made from the sale.

    Cheers,

    Jim
     
  6. gb93433

    gb93433
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    If I remember right, gifts to people up to $10,000 can be declared as gifts by the person giving the gifts and the person receiving the gift does not have to pay taxes on those gifts. If they are not gifts, then they are income.
     
  7. billwald

    billwald
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    It is up to $12,000. Anyone can give anyone $12,000. And cash is not generally traceable. Half the economy in the US is sub rosa (under the table).
     
  8. TomVols

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    A general rule of thumb is this: any money you receive (taking aside any housing allowance or Accountable Reimbursement plan) that is received because of your status or performance as a minister is taxable income. A church buys you a new stove, a motorcycle, or a car? Taxed. You get a $50 Christmas bonus? Uncle Sam must get his share. Car allowance? That's salary too. You have to pay 10% plus 15.3% SECA on the first dollar. Again, ARP monies are not under this rule and your housing allowance is exempt from income tax but not SECA.

    Gifts are a gray area. Use your conscience. If someone gives you a c-note because you did a great job at the funeral, wedding, or whatever, then that's probably income since its genesis was in your role/function. Someone slips you a $20 at the end of the service one day and says "Happy Birthday" ??? Well, that's your call. You could make the case that they might have given you this money even if you were not the minister. But if the money/gift is directly attributable to your function/status as a minister, then you should probably write Uncle Sam a check.

    Personal example: A deacon at my first church gave me a very nice handmade clock for Christmas one year. I did not ask the man who made it how much the value was and submit the 30% tax (this was well before Bush's working Americans' tax relief). However, when this church also gave me a cash gift for my birthday and a cash gift for graduating Bible College, I paid Caesar. The latter was clearly income from my status/performance.
     
  9. Spinach

    Spinach
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    We have done our taxes (not filed, yet) for this year and it was too difficult to figure out what was a gift and what wasn't, so we put them all in the same lump. All our money goes through the same clearinghouse, so it's all just income.

    That's a frustration to me because as the stubborn individual that I am, I think these things ought not be. I don't have any problem at all rendering unto Caesar and all that, but the gift thing frustrates me. If I were not a missionary and my Mom gave me a money gift, I would not have to pay a tax on it. As I stand now, I do. It's not much in taxes. That's not the point, though. It's the principle of the thing.
     
  10. rbell

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    I was about to respond, and I ran across this. Very nicely said...better than I could have put it.

    By the way, everyone...I'm a little rusty at this procedure. If you guys aren't too busy, we can role-play so I can get better. You all play the part of the gift-giving church member, and I'll practice determining if it's taxable or not.












    :D
     
  11. Spinach

    Spinach
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    I've got some Monopoly money.
     
  12. rbell

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    Good. You have the fake cash, and I'm good at fake gratitude. :laugh:
     
  13. Spinach

    Spinach
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    I've got a vitamin bottle full of this currency, too.

    That and the Monopoly money would be about the same thing. LOL!
     
  14. billwald

    billwald
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    NEVER tell the govt what they don't already know and can't find out without water boarding.
     

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