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October 18, 2017
In recent weeks, the parsonage exclusion for ministers of the gospel has been ruled unconstitutional in the US District Court for the Western District of Wisconsin.
It’s not the first time this has happened. This decision was initially made four years ago, but the Seventh Circuit reversed it a year after the ruling due to standing (for further explanation on standing, please refer to the article link below). However, this time around, it seems like standing will not be enough to stop this ruling, and the Seventh Circuit will have to look at the merits of the arguments.
If the ruling goes through and parsonage exclusions are no longer a thing, who will be impacted the most? Ministers of megachurches and televangelists. Unsurprisingly, many of these ministers have allowances that run in the hundreds of thousands of dollars. Having that additional taxable income will certainly lead to a hefty tax amount owed.
However, consider the fact that it might be the average minister that will be affected the most. For a televangelist raking it in, being taxed on an additional $200,000 will undoubtedly have a greater quantitative effect, but it won’t be the end of the world. On the other hand, if a minister is earning a meager salary, the added tax can be a significant source of stress.
For more insight on this matter, read the full article on Forbes.
If you have any tax planning questions or want to know more about how this ruling might affect your tax situation, give us a call at (217) 351-2000!