Just as we pay taxes to be good citizens, also for tax purposes we follow Caesar’s definition of a pastor or minister. Other taxes, such as automobile registration or airport tax in your airline ticket.Real estate tax (1-3% of the value of your home).Social Security tax, which is really two items, Social Security and Medicare (7.65% of your salary) plus the employer’s contribution of another 7.65%.Federal income tax (10-35% of your salary).In the public arena, we need to “render unto Caesar what is Caesar’s.” There are many ways to be taxed by Caesar: The importance here is that we are not talking about the spiritual gift of pastoring people, but the government’s recognition of the office of a pastor. The Bible needs to be our starting point for church life. It was he who gave some to be apostles, some to be prophets, some to be evangelists, and some to be pastors and teachers, to prepare God’s people for works of service, so that the body of Christ may be built up until we all reach unity in the faith and in the knowledge of the Son of God and become mature, attaining to the whole measure of the fullness of Christ. The apostle Paul, in Ephesians 4:11-13, gives a classic biblical definition of the work of the pastor: Now, this is not the Bible’s definition of a pastor. Does Caesar Recognize the Pastor?įor tax issues, the first consideration is the IRS definition of a pastor. If you know the law, then you can make use of the special provisions for substantial tax savings! Let’s begin with a simple definition and then get to the tough issues. Other pastors miss out on potential savings and overpay their taxes for years. Many pastors make mistakes the first year and have huge tax bills due on April 15. All in all, we have a thoroughly confusing issue. Add into this the fact that many churches approach compensation differently and use different terminology. ![]() The issue is so different from compensation in the business world that some CPA’s have given errant advice to pastors. ![]() Few issues are as misunderstood, abused and confused as the tax implications of a pastor’s salary.
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