THIS TOPIC IS TAXING

Financially it is a blessing that churches in the United States are free from paying many taxes, but it is not left entirely tax free. No property taxes are paid by your parish on buildings and grounds that are used specifically for church purposes. And like non-profit organizations, purchases made by your parish for parish purposes are exempt from sales tax.

You parish does however pay taxes on the rectory. And if the rectory also has parish offices in it, the parish pays taxes on the portion of the house that is used for living space. Of course, all the usual employment taxes are also paid by your parish.

Your diocesan priests also pay taxes. Any purchases that they make for anything that is not for use by the church is subject to sales tax. Occassionally someone will say, “Of course, I won’t charge you the sales tax for that,” and I’ll have to correct them by saying that it is a personal purchase and that I do indeed need to pay the appropriate taxes.

There is of course a tax to be paid by the priest on the rectory. Living there is considered an income and so he must pay a tax on it (called a parsonage tax).

The Social Security tax is an odd duck. Any clergy person may opt out of the Social Security system but it must be done within a certain time frame following ordination. I have known a few people to do this, but most men do not and so we pay into it as anybody else would. This point might skew the answer to the question on the poll. That being said, priests pay into this fund as independent contractors. The oddity of that will be seen in the next paragraph.

Of course, income taxes must be paid on the city, state, and federal level. Like death, there is just no getting around it (unless you are taking a vow of absolute poverty.) But unlike Social Security taxes, for these taxes priests are considered employees. (Why the double classification I have no idea and no one has been able to explain it to me.)

This is why clergy taxes scare me. The Diocese of Cleveland brought together a large group of tax consultants recently to help them figure out how to handle clergy taxes. There are (at least as of a few years ago) no forms specifically for clergy and none that exactly fit. I gave up trying to understand and simply gave my records over to a firm (luckily Cleveland has a firm that deals specifically with Catholic Clergy!) and told them to do whatever they needed to do and to just keep me out of jail.

There you have it! No big mystery. Although I buck at the complexity of it, it is only fair that clergy do their part to help keep the country rolling. Now, if there were only a tax break for celebacy.