If Pastor Jackson Would Have Listened, He Wouldn’t Be In the Trouble He Is In
He had attended an earlier Church Management and Tax Conference and heard me teach that a Pastor could not claim all Housing Allowance and no Salary. In our conferences we teach that Housing Allowance should not exceed 50% of the Pastor’s total compensation package.
During that Conference Pastor Jackson seemed argumentative that all of his compensation was much less than he paid monthly in housing expenses, and therefore felt it was only right to list all of his compensation as Housing Allowance, thereby receiving tax free income.
The Difference a Couple of Years can Make
It had been two years since he last attended our Conference, but this time things were different. Pastor Jackson could hardly wait until the morning break, at which he approached me with these words, “I wish I had listened to you.” Conducting hundreds of Conferences each year and meeting thousands of people, I had no clue as to what he was referring.
He then proceeded to tell me how he had disagreed with my statement that Housing Allowance is not to exceed 50% of the Pastor’s total compensation package. After leaving that conference he attended one conducted by another group that pretends to know Church Accounting Law. At that conference that group told him that he could easily claim all of his income as housing and proceeded to tell him how to get away with it.
Unfortunately, a year later the IRS called him in for an audit and penalized him heavily with taxes, penalties, and interest because of improperly calculating his Housing Allowance.
This time when we provided the opportunity for attendees to retain our services he was the first in line.
Cheap Advice Is Expensive
Pastors and Church Leaders all across this nation look for so-called experts to tell them what they want to hear rather than what they need to hear. In the story mentioned above, Pastor Jackson could have saved thousands of dollars in taxes, penalties, and interest had he listened and heeded my advice in the first conference as I read the IRS regulations concerning Housing Allowance. Unfortunately, he had heard other Pastors tell him how they were receiving all of their income tax free so he thought it was legal. The group that told him he could claim all of his income as housing is still teaching this fallacy across the nation and many Pastors are getting caught in IRS audits and paying the penalty for this misinformation.
As a young man growing up I was constantly told, “If something sounds too good to be true, it probably is.” The same is true in matters of Church Accounting Law. Cheap advice is expensive. Although ministers are the least taxed employment group in the nation, the IRS will find ways to get their share and attempts to circumvent the law will only cost you more than you want to pay.
If Pastors and Church Leaders would just “do it right” they would not have to worry about Federal Marshals showing up at their Church as happened in Churches in Texas and Michigan recently.
Why You Need Us!
Chitwood & Chitwood is a third generation company that has been protecting Churches, Ministries, and Pastors for 80 years. WE ARE THE BEST! At our live Conferences across the nation we will tell you what you need to hear rather than what you want to hear. Do we use fear tactics? NO, but if the truth frightens you it is because you and your Church are out of compliance. However, if you will listen and heed our counsel, you can rest assured that your Church books and records will be in compliance with IRS regulations and you will have nothing to fear.
It would behoove every Pastor, Pastor’s Spouse, Church Trustee, Elder, Deacon, and Church Leader to attend the next Church Management and Tax Conference. To register, visit our website at www.cmtc.org or call 800-344-0076. This will be the best investment you and your Church can make this year.