Easily the most sobering commentary I’ve read in a long time:
I have been following his blog for sometime now. He has gotten me hooked on the conflict in the SBC between Calvinists and anti-Calvinists. I just love fights that I don’t have a dog in.
I’m thinking for the really small churches the earned income credit is more important than the clergy tax exemption. In reply to the title:
The parsonage allowance critical to the viability of small churches
Since we are considered self employed we can claim the EIC. For ministers who no longer have children at home it may be more of an issue, but for those that have a few kids to deduct it is not so important. Many small church pastors would have to make a lot more before they even have to worry about paying any income taxes at all, and if they were making that much, then they could probably afford it. Do not misunderstand me, I am thankful that many faithful servants have been able to benefit from this deduction, but I also think that many have abused it and have not helped the cause of Christ by appearing greedy.
In Canada the housing allowance is restricted by a couple of factors. One is the cost of housing in one’s local area - you can’t claim more for the deduction than the fair market value for an average size home. There is also a formula related to total income where the final housing allowance number is adjusted relative to the total compensation. You may not be allowed to claim all of the fair market value as Housing Allowance if you are making over a certain amount. The formula is very complicated and I don’t understand how to figure it out. Thankful for tax software.
However, limitations such as these seem reasonable.
Another aspect in the USA that bothers people is the mortgage interest deduction - the pastor in the USA gets the tax free housing allowance AND the mortgage interest deduction. That strikes many observers as unjust.
Discussion
Newouch
Easily the most sobering commentary I’ve read in a long time:
NewMore worried about Earned income credit.
I’m thinking for the really small churches the earned income credit is more important than the clergy tax exemption. In reply to the title:
The parsonage allowance critical to the viability of small churches
Since we are considered self employed we can claim the EIC. For ministers who no longer have children at home it may be more of an issue, but for those that have a few kids to deduct it is not so important. Many small church pastors would have to make a lot more before they even have to worry about paying any income taxes at all, and if they were making that much, then they could probably afford it. Do not misunderstand me, I am thankful that many faithful servants have been able to benefit from this deduction, but I also think that many have abused it and have not helped the cause of Christ by appearing greedy.
NewI don't think the EIC is at risk
The EIC is not at risk. Applies to all taxpayers who qualify based on income
The housing allowance gets questioned because it applies to a category of worker - the clergy
Twitter
Jim's Doctrinal Statement
NewThe Housing Allowence
is also valuable in an ultra high housing cost area like San Francisco.
Hoping to shed more light than heat..
Newsome restrictions seem reasonable
In Canada the housing allowance is restricted by a couple of factors. One is the cost of housing in one’s local area - you can’t claim more for the deduction than the fair market value for an average size home. There is also a formula related to total income where the final housing allowance number is adjusted relative to the total compensation. You may not be allowed to claim all of the fair market value as Housing Allowance if you are making over a certain amount. The formula is very complicated and I don’t understand how to figure it out. Thankful for tax software.
However, limitations such as these seem reasonable.
Another aspect in the USA that bothers people is the mortgage interest deduction - the pastor in the USA gets the tax free housing allowance AND the mortgage interest deduction. That strikes many observers as unjust.
FWIW
Maranatha!
Don Johnson
Jer 33.3