Teachers Get a Housing Allowance, Right…?

I always thought most church pastors make next to nothing.

I don’t know if the guy I’m about to mention is an exception or run-of-the-mill, but maybe I need to rethink that…

Check out this story from a tax preparer as he explains work he did for a local minister

The minister gets paid from his church, from which he received cash of $105,000 in 2009. He received a W-2 with wages of $40,000 and a “housing allowance” of $65,000. First, ministers, along with other state workers, are allowed to elect out of social security and Medicare. By electing out, they don’t have to pay into the programs and they don’t ever get to draw from the programs either.

There’s a lot more where that came from… but if numbers make your head hurt, here is the result in chart form:

The last line is the important one…

I wonder how many pastors work the system like this.

By the way, if you’re not completely pissed off already, read the last paragraph of the post and you’ll be in full rage mode.

There was a day last year when I calculated how much I make for coaching Speech Team/Forensics outside of my regular teaching duties. It came out somewhere between $2 and $3 per hour. I think I need another Masters degree + 298312 years of service before I hit six figures for my regular teaching salary.

Should’ve gone to seminary school. That’s where all the cash is at.

(via Pharyngula)

  • http://www.zazzle.com/atheist_tees The Godless Monster

    Crime pays.

  • http://www.houndsinthekitchen.com Rachel (Hounds in the Kitchen)

    I worked at a Unitarian Universalist church for awhile and became familiar with this system. What a crock. The head and associate minister both counted about a third of their salary as ‘housing allowance. It’s perfectly legal but I wish it wasn’t.

    I wonder who the ‘other state workers’ are as listed in your first quote from the tax preparer. I haven’t heard of anyone other than ministers being allowed this loophole.

  • Grimalkin

    This guy makes DOUBLE my total household income (two wage-earners + a dependent on the way).

    Where’s my housing allowance?

  • http://www.raywhiting.com/MyLife Raytheist

    Rachel: When I worked for the State of Louisiana, a portion of my salary was paid into the State employee retirement system, NOT into Social Security.

  • mrdanny

    You may not agree with it, but that’s the separation of church and state. Deal with it.

  • P. Coyle

    Back in 2002 Congress passed something called the “Clergy Housing Allowance Clarification Act” (CHACA). This act basically limits the exclusion of a minister’s housing allowance to the fair rental value of a home, and not the actual cost of maintaining that home (if larger than the fair rental value). It gave statutory backing to a position the IRS had already staked out on the matter.

    The interesting thing to note is that the Congressional Record suggests that CHACA was actually passed for the purposes of denying the Ninth Circuit Court the opportunity to rule on the broader issue of whether a special housing allowance for clergy is constitutional in the first place.

  • Kait

    Some pastor bought my parent’s old house in Newport Beach for $1.6 million (paid for by the church). I guess God wanted to get him some prime oceanfront real estate…

  • Godless Lawyer

    Since I know I’m not the only Canuck who comes by the blog, here’s an interesting little document entitled ‘the pastor and his taxes’ from ‘vision ministries’ that talks about the deductions and credits available to pastors under Canadian law.

    http://www.vision-ministries.org/pdf/ThePastorAndHisTaxes.pdf

    I can’t speak to its currency or veracity.

  • http://eternalbookshelf.wordpress.com Sharmin

    This is ridiculous. You’re right, the last paragraph is infuriating. Certainly, there must be members of clergy who don’t make much money, but there are those who do or who use the system like this. I wonder if this minister (and others like him) understand anything about “humble means”.

  • Erp

    One can’t really blame churches for taking advantage of the housing allowance since it exists. The problem is (a) it exists and (b) some abuse it even beyond its mere existence (e.g., large mansions). An housing allowance of $65,000 which comes to over $5,000/month seems very high unless he lives in a high cost area (what type of house is he living in?). Note he is also able to double count mortgage interest and property taxes.

  • http://happyatheists.com SlickNinja

    High cost area or not, why does a priest get such a huge tax deduction? Many churches provide living for their priests.

  • P. Coyle

    In answer to Hemant’s question,

    I wonder how many pastors work the system like this,

    I suspect it’s pretty much every damn one of them who knows what the law is — and from what I can tell, the individual denominations are very helpful in providing information to their clergy about what the law is.

    Note well also Erp’s point: Ministers get to exclude their housing allowances from their reported income, and then deduct their mortgage interest and property taxes from their tax liability.

    This guy had an income in excess of $100,000. That’s a bit on the high side for clergy, but not extreme. He’s probably in about the 85th or 90th percentile.

  • P. Coyle

    Note that the clergy housing allowance is currently under court challenge from the Freedom from Religion Foundation. See here.

  • JSug

    That is sickening. Someone in the comments section on that blog pointed out that the housing allowance was intended to provide something equivalent to ministers whose church provides a parsonage. But that doesn’t make any sense, because a parsonage isn’t subsidized by the government, except that they probably don’t have to pay property taxes. It isn’t our duty to provide housing for priests, and a housing allowance should not be tax exempt.

  • http://religiouscomics.net Jeff P

    Since ministers really just say “God did it” and “If you don’t believe X, Y, and Z you are going to hell”, they can be replaced by a simple looping tape-recorder or pull-string doll. That would make it necessary for the former pastor to find a job in the real economy, make a real contribution to society, and pay his fair share of taxes.

  • Chris

    You know what I feel frustrated at? All this shit happens and I feel helpless to make a change. Tax cuts for the rich, no taxation (or little for clergy),eliminating or cutting back on programs for the poor and a powerless that is so very upsetting. Where’s the anger in this country? This stuff just keeps happening and although we may be individually angry, there’s no power behind it….so we just keep getting reamed. This is just a comment from a not particularly smart and certainly low income atheist.

  • http://www.facebook.com Mamma G

    …and where does all that money come from? Swindling people who, I bet, don’t make that much or close to it.

  • P. Coyle

    Certainly, there must be members of clergy who don’t make much money, but there are those who do or who use the system like this. I wonder if this minister (and others like him) understand anything about “humble means”.

    Google “prosperity theology”. God wants you to be rich, don’tcha know.

  • Evil Don

    This reminds me of back when I was still a Christian living in Ames, Iowa attending a church called Cornerstone. I went to a church business meeting once in 2000 and got a copy of the budget. The head pastor, who had no seminary training, made more money back then than ISU professor Hector Avalos made this past year. It just makes me mad when I hear Christians talk about how atheists live for money. Someone should tell Dr. Avalos he can make a lot more if he got back in the Christian game.

  • P. Coyle

    A little further research reveals that the law providing for the clergy housing allowance states that it is for “ministers of the gospel.” This seems to have compelled the Treasury Department to determine that, in the phrase “minister of the gospel,” the word “gospel” does not mean “gospel.”

    Otherwise (or so I surmise the logic behind this peculiar assault on the English language to be), how could a rabbi or an imam possibly qualify?

  • RJ

    Let’s not forget we help pay for their institutions because of their tax exempt status. The pis icing on our shit cake.

  • SeekerLancer

    I live in a really depressed area and I know lots of ministers, not the giant mega-church millionaires mind you, that are extremely well off with big houses and tons of money to spend.

    I don’t really care that much, it just gives me another reason on top of the mountain of reasons I already have to think they’re full of shit.

  • Philbert

    Puts a different spin on Dan Dennett’s recent piece on why pastors feel financially unable to leave the church. They would have to walk straight into senior management to make anything like their current post-tax income.

  • Marsha in TN

    Thing is, at so many of these churches you don’t have to have attended any seminary or college. If you’re “called” by the Lord that’s good enough. Don’t get me started, I grew up in a small Southern Baptist church in KY, and some of the crap that went on there is disgusting. But many of the same people I knew way back when still attend, and still give them money.

  • http://www.facebook.com/profile.php?id=100000586562927 Donna Hamel (muggle)

    Chris, I share your frustration. What does it take to make us rise up and rebel?

    P. Coyle beat me to it. I was going to mention FFRF’s lawsuit. This is why I keep paying them dues. I feel a need to do something.

    It’s time to end all this special privileges (for both religion and corporate America) funded by the tax payers while screwing over said tax payers by cutting program and screaming how they don’t even deserve to live if they can’t shell out hundreds of dollars a month extortion fees to insurance companies for the privilege.

  • Simmering

    I think ‘normal guy’ has an extra digit in the income if you ask me.

  • AxeGrrl

    P. Coyle wrote:

    Note well also Erp’s point: Ministers get to exclude their housing allowances from their reported income, and then deduct their mortgage interest and property taxes from their tax liability.

    The hosts of the podcast ‘Irreligiosophy’ made this precise point in relation to Rick Warren in one episode (can’t remember which one now).

  • Nick

    What this says to me is that DMV workers don’t have to pay Social Security Tax or serve you in a timely manner (and even though I control Naval Satellites [which help protect servicemen in the middle east and globally, as well as call home and email their families] I have pay 33% of my income to the federal government and can barely afford health insurance, ministers get to keep 99% of their earnings). FFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFFUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUUU!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  • Jason Orlando Hawk

    So… one person (or even a few people) abusing a system is sufficient to declare it a travesty of justice? Turn off the outrage machine & you might realize that this case is an outlier, not the standard.

    In my region, I recall a pastor once earning an “absurd income” (actual quote from a non-pastor) of $31,200 a year for a full time position, AFTER completing Seminary. Please note, by the standards of the church, since his position was “Full Time,” he was not allowed to have a second job, since that would mean he was not constantly available & on-call.

    Given the fact he had a family, I don’t think his income was actually that “absurd.” My current ministry income is actually about $16,000 a year. Granted, I’m allowed to have a second job (which is subject to all normal tax rules) that brings my income up to a slightly more reasonable $20,000 a year. I don’t know about EVERY church in my area, but there might (emphasis on MIGHT) be one church where a pastor has a 6-figure salary, but then again, filling a leadership role for an organization of over 5,000 people might qualify a person for a large paycheck.

    There are traditions where ministers are completely reliant on the church for their shelter. Some churches do this in the form of a parsonage. Others do this in the form of a housing allowance. The housing allowance exemption exists b/c of the concept of “Freedom of Religion.” This may seem foreign (or worth little complaint), but think for a moment of the dangers found in the idea of taxing “Freedom of Religion.” If that doesn’t make sense to you, then try taxing “Freedom of Speech.”

    Deciding which portions of a church’s income are taxable, & which aren’t, is a very dangerous thing. “We aren’t violating Freedom of Religion. We’re just making it financially impossible for unpopular religions to survive.” And again, if you need a comparison, imagine taxing UNPOPULAR forms of Freedom of Speech.

    Since there is a standing religious tradition of the pastor (or missionary, or evangelist, etc…) depending on the church for shelter, the tax code respects it as a ministry & function of the church. Are there loopholes that can be abused? Yes. But then again, welcome to American Tax Law. If you really think the ministers are the one & only group abusing the system, I applaud your willingness to be blind to a litany of other problems.

    The vast majority of ministers do not have a tax sheet like that one.

    And, as has been mentioned, there are a lot of strict restrictions on how Housing Allowances are handled, including things like Fair Rental Value, Cost of Care Limits, & strict regulations on when & how churches are required to hand out a Housing Allowance. I can tell you from first hand experience that your example pictured above is actually highly illegal. Mortgage, Furniture, Utilities, etc… are all considered PART of the Housing Allowance. In that particular instance, the tax preparer apparently didn’t know how to do their job.

    In one case I am familiar with, a church intended to give a minister a reasonable housing allowance, but they missed the deadline. Now, the church in question could have gone back & fudged the records. It’s not like anyone would have known the difference, but the minister (I knew this individual personally, so I can say for a fact this did happen) just shrugged, accepted a full tax burden for the year, & went on with his life.

    Yes, that’s right. There are a few honest ministers out there, even on financial matters.

    Oh, & don’t forget… ministers are considered self-employed, so there are places where our taxes hit us harder than a normal worker. Exemptions like the Housing Allowance exist to off-set that difficulty.

    A final item that will probably never make the news on this site: churches are actually hyper sensitive to the possibility of pastors abusing the church finances. Many churches take the concept of “Stewardship” very seriously, & a pastor who cheats the system gets booted very quickly & unceremoniously. I’ve seen several instances in churches around me. A church that turns a blind eye to a pastor cheating the system is the exception, not the rule. We’ve got that whole rule about “not lying,” you know.

    Here’s the problem: we have a FLEXIBLE tax code. On one hand, that’s a good thing. It gives me & you a variety of exemptions, so that the government can’t put it’s hands in our pockets too many times. On the other hand, Flexible (in this instance) equals Complicated, and when you have a complicated system, people will find a way to cheat it. Businesses cheat. Individuals cheat. Heck, if you’ve ever taken any money “under the table,” you’re guilty of the same thing.

    We’ll never have a tax system completely free from people who cheat it. However, the advantages of a flexible tax system far outweigh the shortcomings and loopholes. Evil pastors represent a small fraction of a much larger group of problems.

    Still, I understand that some people on this site might prefer a system where there are absolutely no exemptions for religion what-so-ever. Don’t worry, there is a tax system custom made to your concerns: Consumption based (or Sales) Tax systems completely eliminate our loop hole laden system, providing a system where everyone who participates in our economy contributes at a simple flat rate, no cheating allowed.

    If you’re curious about this, just check out Mike Huckabee, who is a prominent supporter of the Fair Tax. ;)

  • http://thesecretatheist.wordpress.com/ TheSecretAtheist

    Not to defend religion, but it isn’t like this for everyone.

    My father left a well-paying job in the field of nuclear waste management in the early 90s to go to seminary. He was supporting a family of four at that time. We moved halfway across the country and he gave up his full-time job to become an unemployed student.

    Over the next few years he burned through the savings they had, had two more kids, and earned a masters degree (to be fair, over half of his tuition was paid for by the Southern Baptist Convention so it isn’t like he left with huge amounts of debt from school. The only school they carried away from seminary was that for my youngest two sisters’ birth).

    I’m not sure the exact figures that he made at his first church, but it was less than $30,000 and they lived in the church parsonage.

    The church he is at now he makes less than $40k, including the housing allowance, and they pay average taxes for a family of four (me and the oldest little sister are no longer dependents). He works a full week, sometimes more. He is always on call anytime there is illness or death in the church family. In addition to this he is on the board of directors for, and quite heavily involved in, a local ministry center that helps poor families with groceries, job services, and dental needs throughout the year and provides Christmas presents for the children.

    Here are things that they do not have in their mid 50s: A retirement plan of any sort beyond Social Security, very much equity at all in their house, stocks, or much savings. They burned through the last three while he was in seminary. Since they sold their first home before going to seminary and did not own another until 5 years ago they haven’t been able to build up much equity.

    There are people who go into ministry because they see a way that they can work it to their benefit, “play the system”, and come out on top. There are others who go into it because they truly feel that they are called of God to spread the gospel and help the needy. Misguided and delusioned as they may be about the truth of things, they are not bad people.

  • P. Coyle

    There are traditions where ministers are completely reliant on the church for their shelter. Some churches do this in the form of a parsonage. Others do this in the form of a housing allowance. The housing allowance exemption exists b/c of the concept of “Freedom of Religion.”

    No, the housing allowance exists because Congress decided to give a special tax break to clergy in order to promote religion, in violation of the First Amendment.

    Deciding which portions of a church’s income are taxable, & which aren’t, is a very dangerous thing. “We aren’t violating Freedom of Religion. We’re just making it financially impossible for unpopular religions to survive.” And again, if you need a comparison, imagine taxing UNPOPULAR forms of Freedom of Speech.

    Do you actually suppose that the employees of an organization established for the purpose of promoting and defending atheism would be legally entitled, under the statute in question, to a clergy housing allowance as “ministers of the gospel”? Of course not. But your argument here would suggest that those employees would be the victims of the taxation, by the federal government, of an unpopular form or freedom of speech. To the extent that atheists promoting atheism are not equally entitled to the same tax breaks as ministers promoting religion, you are precisely correct.

    I can tell you from first hand experience that your example pictured above is actually highly illegal. Mortgage, Furniture, Utilities, etc… are all considered PART of the Housing Allowance. In that particular instance, the tax preparer apparently didn’t know how to do their job.

    Yes, it’s highly illegal because it’s a violation of the Constitution, the self-described “supreme Law of the Land.” However, it it perfectly in accord with IRS regulations. I call your attention to IRS Publication 517, which states, “You may deduct the home mortgage interest and real estate taxes you pay on your home even though all or part of the mortgage is paid with funds you get through a tax-free rental or parsonage allowance.” If your first-hand experience differs, perhaps you need to get better tax advice.

    Still, I understand that some people on this site might prefer a system where there are absolutely no exemptions for religion what-so-ever. Don’t worry, there is a tax system custom made to your concerns: Consumption based (or Sales) Tax systems completely eliminate our loop hole laden system, providing a system where everyone who participates in our economy contributes at a simple flat rate, no cheating allowed.

    My understanding of the Fair Tax is that, under the plan, clergy would be treated the same as employees of any other non-profit organization. This would indeed be a worthy goal. Note, however, that it would not be necessary to adopt the Fair Tax to achieve this goal. All that is necessary would be to repeal special tax breaks for clergy and religious organizations that are not available to all, including atheists and atheist organizations. But I gather that in general you are not troubled by the use of the tax code to discriminate in favor of religion and against atheism, in violation of the Constitution.

  • staceyjw

    Talk about a fucking BS scam!
    How do I get in on it? Can I make up my own church? I’m so NOT KIDDING.

    Try making that income with no deductions, then you will be really mad! I do, and This is the FIRST year I even have deductions, for my husband and baby,but I will still pay out an enormous amount in taxes.I am the only breadwinner, so paying 30k SUCKS. I think the government just wants to make sure I can’t actually take home too much. No matter how much I make, I end up with the same take home. I don’t mind taxes, except when people like this don’t have to pay them.

  • bglassman

    A pastor with whom I am familiar served a church that chose to give him two houses on the church property. His son-in-law couldn’t find work because he had been caught stealing from a different church. So the pastor put his daughter and her ne’er-do-well husband in the second house and persuaded the tiny, aging congregation to authorize utility payments for the second house, despite its having no role in the church whatsoever, other than housing his daughter and her husband. I realize that any individual case can be pointed to as an exception, but the contempt for government that has become a kind of second gospel for some of the faithful and their pastors is indicative of contempt for the tax law. They’ve given up any pretense of “rendering unto Caesar” and his successors a long time ago. And every dollar they don’t pay in taxes is a dollar with which the same government they decry is subsidizing them — with our money.

  • http://riles52.blogspot.com Peter Reilly

    http://riles52.blogspot.com/2011/01/work-fight-or-pray-vestige-of-medeival.html

    There is cuttently a constitutional challenge Freedom from Religion V Geitner.

    Also just recently tax court ruled in Driscoll v Com that parsonage can apply to multiple homes.

    I have fairly lengthy discussion of this issue in several blogposts

  • Wife of minister

    If you would do your own research about the allowance other than believing what others say, you would realize that it isn’t a tax break. In fact, the allowance is subject to a self-employment tax of 15.3%. My husband is a minister, I don’t have a job, and we’re barely making ends meet. In fact, WE OWE the government on our taxes. It isn’t a break. In fact, we’re looking to see if we can get out of it. Do you’re own credible research before you make assumptions.

  • Steve

    This guy is working the system, but this is not how all pastors do it, including myself.

    First of all, it’s not that easy to opt out of social security and medicare. A pastor has to be able to truthfully sign a document that essentially states that for purely religious (not financial, social, etc…) reasons, he/she is opposed to the social security/medicare. I have no religious qualms with these programs so I couldn’t honestly sign that document, therefore I still pay into both programs just like everyone else. In fact, because many pastors are considered “at will” employees, I’m actually paying double on social security, the same amount a self-employed person would pay.

    As for the housing allowance, you can claim whatever you want, but you also have to be able to prove that that income went toward specific housing expenses such as mortgage, improvements to the home, utilities, etc… And not items like your car payment, clothing, food, etc… If you can’t prove you used the entire amount for qualifying expenses, then at the end of the year you’re responsible for paying taxes on the unused portion of the housing allowance.

    All of this boils down to the fact that if this guy were ever audited, he’d probably be in serious trouble.

    I’m working hard to do things the right way (and I make less than half of what he does, by the way), and I know plenty of other pastors who are trying to do it the right way as well.

    It’s a shame some people who set themselves up as moral teachers or examples are working the system like this.


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