Tithe Withholding from Paycheck

by Dina

Can clergy and non-clergy members make pre-tax payroll deductions to be used for tithing?

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Comments for Tithe Withholding from Paycheck

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Mar 26, 2010
Tithes as Pre-tax Deducts
by: Marcus in Texas

Since charitable deductions to religious organizations, the Red Cross, the United Way or other, may be claimed only if a person itemizes deductions instead of taking the standard deduction, then my "guess" is that allowing tithes or other regular charitable contributions as pre-tax deducts on a regular monthly (or other) paycheck would be highly unlikely.

I am not a tax attorney nor a CPA so my opinions are based strictly on experience and are only my opinions.....sometimes based on common sense.....

May 26, 2010
pre-taxTithe withholding
by: Debbie D

If you are not counting his tithe as income on his W-2, it's not ethical to do this because you are not showing the tithe as income and it is indeed income. Also, are you showing the tithe amount on the church budget under his salary info? Does it show up anywhere? If not, then it technically doesn't exist. We are going through this same situation at our church.

Aug 04, 2012
Pre-tax Tithing
by: DublG

Your pastor may file for charitable giving like all other taxpayers as an itemized deduction. He needs to be paid the income and then give the tithe. To paraphrase King David, "What is a sacrifice, if it costs me nothing?"

Jan 11, 2013
pre-tax tithing
by: rpm1024

So My Pastor and another person who is on payroll at the Church wanted to have their tithes taken out of their check. (after my informing them we could do so) I called quickbooks and they helped me set it up so it was a payroll item and would go through the correct avenues in order to be reported on their w-2 and also give them a tithe report (donor statement) at the end of the year. All well and good but when I just went to do the W-2s I realized it took the 10% out pretax. I didn't even think to check that. From what I am reading here I have done the wrong thing. Is that true? What do I do from here?

Jan 11, 2013
pre-tax tithing
by: rom1024

By the way the 10% only affected fica and medicare takes not income.

Jul 15, 2014
Tithing are NOT Pre-Tax and Must Be Included in Income Reporting
by: Vickey

My apologizes to RPM1024. Comments go live without me seeing them. I just found yours while researching this "pretax tithes" subject. Know this is probably posted too late to help, but maybe it will help others in similar situations:

Withholding the minister’s tithes is not a pre-tax deduction as the posters above have pointed out.

If it did not affect the total compensation recording (the tithes were included in wage reporting in Box 1), you were fine with the Pastor as you do not withhold FICA on ministers.

However, you probably needed to contact QuickBooks payroll for the other person on the payroll (assuming they were not a minister) for instructions on how to correct this issue.

You probably also had to file amended 941s:(

Another important point to make is that ministers that have their church withhold tithes should keep their check stubs showing their withheld contributions for their contribution receipts along with the church’s contribution statement...especially if they file a Schedule A and claim them as a charitable contributions.

What I would definitely advise ministers not to do is claim their withheld contributions as a business expense. Even though there was an unpublished “small” Tax Court decision that allowed a minister to claim "mandatory" withheld tithes as a business expenses on her Schedule C over 10 years ago. The IRS has since then published audit guidelines for their agents when auditing ministers that states ... “ ministers’ contributions to the church are not deductible as a business expense. ”

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If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)

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