Monday, April 16, 2007


Just completed my taxes: federal, state, school tax, city tax. Refunds for school and state taxes don't cover the bill due to Pharaoh.

You may not realize your priest has to pay taxes on the house the parish gives him to live in. That counts as income, along with all meals provided.

The federal forms are pretty straightforward, although not so* the worksheets for Schedule D (that's what you get to fill out if you have investments or mutual funds, and you get a form detailing things like "capital gains," "modified capital gains," and something called "unrecovered section 1250 distributions" or something like that).

Worksheets had fun things like:

Write amount from Line 44 here:

Add amount from Line 23, Schedule D, here:

Subtract amount from Line 23, Schedule D, here:

Is this amount same as the beginning amount? Start over...

You think I'm kidding--not much...

The City of Piqua forms are the worst. Get this: last year, I got my form back, because I made a mistake. Okay--so I got a refund. Great, huh? But the refund was reduced by the amount of the penalty . . . I read the letter three times--couldn't figure out what the penalty was for, and why I paid a penalty when I overpaid my taxes . . .

So this year, I just put a lot of squiggles everywhere, and I'll wait until they tell me my taxes--the $25 penalty counts as a tax-preparation fee.

The state of Ohio's tax forms were, in contrast, fairly simple and clear. In fact, the state enables you to file online, and it's very user-friendly. No surprise, I guess, that the state is really, really good at soaking us with taxes, since we can't get industry to move here.

Total time? Three and a half hours. Not too shabby.

* I can't stand to leave my bad grammar uncorrected--corrected 7:30, 4/17


Anonymous said...

Try computer software, Father. Like Turbotax. If you change a figure on, say, line 25, the computer makes any other necessary changes. It also transfers information from the federal to the state forms. And next year, it would transfer information from 2006 to the 2007 form. I've done it both ways, computer and pencil, and I'm sticking with software. Magistraret

Rachel said...

Anyone making less than $52,000/year can go the IRS site for a list of websites (including TurboTax and H&R Block) that'll let you prepare federal taxes online and e-file them, all for free. I prepare taxes myself on paper first, because I like to understand what's going on, and then use the online software which shows me what I missed-- usually the software saves me a few hundred dollars.

I had unrecaptured section 1250 gains too. :) I get mad when the 1040 instruction book itself says in some areas, "Consult your tax adviser." They don't even pretend that an average individual can figure the stuff out on his own. How wrong that a lot of people are essentially forced to hire professionals in order to meet their government obligations.

I have a random question; perhaps no one shall know the answer. My parish is staffed by a bunch of religious priests of the Oblates of the Virgin Mary who've taken vows of poverty. Would they be forced to pay taxes on the house they live in, or can they turn themselves into a charitable organization somehow and go tax-free?

beez said...

I'm with anonymous, Father. I used TurboTax this year, although I don't have to worry about things like "Reclassification of previously unitemized deductions from a prior year in which itemized deductions exceeded overall taxable income from sources outside primary employment."

OK, I admit I just made that up. But, come on, for a second you thought it was real.

Anonymous said...

Here in the Northeast, we have been pounded with a Nor'easter for the last couple of days. In a move that surprised me, the IRS granted a 2-day extension to filers "affected by the storm." If you can claim that you were affected, you now have until 11:59 PM on Wednesday, April 18, 2007 to file your 2006 tax return.

IRS gives storm victims a 2-day extension

"You may not realize your priest has to pay taxes on the house the parish gives him to live in. That counts as income, along with all meals provided." -- Father Fox

That's disgraceful. Incidentally, are you required to pay a gift tax on the value of the meals you receive from parishioners? If, for example, the Martucci family invites you over to dinner and they serve Mrs. Martucci's world-famous lasagna, do you report the fair market value of that meal -- say, $50 a plate -- on your tax return? By contrast, if the O'Leary family serves that horrendous Irish stew that you hate, do you get to take a deduction because you cleaned your plate? How does that work? I imagine it's a good thing that individual tax returns are not yet a matter of public record, huh? :-)

By the way, and if you don't mind me asking, who determines what salary a priest is paid?

Tc said...

My Ohio state taxes were pretty painless. (Aside from the female voice that I lovingly named "Rachel" on the Ohio TeleFile line).

Anonymous said...

My diocese gave us a little taste of how horrid this whole process can become by giving us a 1099 Misc. this year. Having no idea what to do with it, some of my brothers have been coming around asking for help. "My sister's an accountant, she did it for me" was the best I could offer.

Unfortunately, a priest friend of mine paid $1,600 this year. Tax codes were certainly not written with celibate priests in mind.

Anonymous said...

That Social Security thing is a pain in the butt. I have an accountant, who is also a deacon, do my taxes for free. It saves me a lot of money.

Kasia said...

Wow - is it higher if it's a nice rectory in a good neighborhood? Or is it just a basic "X much for housing" allowance?

Anonymous said...

We all pay income tax and social security and medicare taxes on our housing expenses. We pay the tax on our earnings and then use what remains to pay the bills.

The tax code actually favors priests in that their housing allowance is taxed for self-employment purposes but is not taxed for income tax purposes.

Priests must pay both halves of the social security and medicare tax but in essence we all do since if our employers did not need to pay their share, they could increase our salaries. In my archdiocese, the priests receive more compensation in order to cover the additional self-employment tax.

Priests do not pay tax on gifts and neither does anyone else. Stipends for saying Mass are taxable as they have been determined by law to not be true gifts.

Priests receive health care coverage, retirement benefits and other nontaxable fringe benefits that many people do not receive.

American priests have more discretionary income than most parishioners and really don't have anything to complain about as far as money goes.

Priests are other clergy have the option to opt out of the social security system if they do it within two years or ordination and as long as they have a moral problem with it. This option is not available to non-clergy.

Fr Martin Fox said...


I agree that everyone pays taxes on housing expenses; I did have a life before I became a priest, and I know about these things.

I didn't say that was unfair; what I said was, "you may not realize" your priest pays those taxes. Many are not aware priests pay any taxes at all.

Likewise, I thought people should know the priest pays both parts of the social security; again, I suspect many think the diocese or parish pays that.

Anonymous said...

Religious orders are tax exempt organizations. Religious priests do not have income; any earnings they make are paid to the Order and not to themselves.

When I was in the monastery, I would run into the humorous situation of trying to buy beer at the beer store (stupid PA laws) with our tax-exempt card. I spent many an hour trying to explain to store clerks why 'beer for the Church' was not an oxymoron--especially if the clerk was evangelical or other 'dry' religion.

Kat said...


Imagine buying booze for a Jesuit function, in New Orleans and still getting an odd look and comment.

p8 said...

As a former Protestant minister, I can sympathize with Fr. Martin's pain over the complexity of the tax rules for clergy. I was fortunate to serve in 2 states (TX, FL) with no state tax, though. Glad you're done, Padre!

Anonymous said...

Father Fox - The Diocese of Las Vegas is desperate for additional priests. There is no state income tax in Nevada. There is no city tax in Las Vegas or, the best of my knowledge, any of the surrounding cities.
Not that I'm trying to deprive Piqua, mind you. Just saying... :)