How One Pastor Paid $5,000.00 for Someone to do His Taxes

By Raul Rivera

This is a real story about a pastor's tax return.  I am retelling it with his permission.

Pastor Jose was happy that the previous year he had received a refund of around $4,000.00.  Having used a local tax return preparer working for a well-known outfit to do his taxes, Pastor Jose felt good going back to him when the next tax season came around, especially since the preparer had appeared to be knowledgeable, and very courteous the first time.  He sat down with the preparer, gave him all of his relevant tax documents, and chitchatted for about 20 minutes before leaving.  It was not too long before he received a call telling him his tax return was complete.  His refund this year would be $4,137.00.   

Now in order for his preparer to file Pastor Jose's taxes electronically, all he had to do was sign a particular form and wait for his refund.  In the meantime, he called me to discuss some other church matters and proceeded to tell me about his tax return and how he was going to receive a "very large refund."  Something he said intrigued me.  So I asked him a question.  "Is your tax return preparer specialized in doing taxes for a minister?"  He was surprised by my question.  "What do you mean?" asked Pastor Jose.  I replied by saying, "Just because you got a four-thousand dollar refund doesn't mean you have a good tax return preparer."    The pastor was all ears.  He knew I was going somewhere with my point, especially since we had done all of the paperwork of helping him start his Iowa church.  After a few more minutes of conversation, he said, "Can I fax you a copy of the work he did for me and let you take a look?"  I was delighted.  When I finished reviewing it, I said to him that he should be getting back $9,184.00. 

How much does your tax return guy really cost you?

Ministers are treated differently in the tax code and, if they plan correctly, should get a much larger refund on their taxes than the average person.  Most tax return preparers are bean counters. Their only concern is doing the taxes by documenting what happened last year.    He may be cheap today, but in actuality, he may be super-expensive.  Just ask Pastor Jose.  Had he chosen the second year to remain with the original tax preparer he used the first year, it would have cost around $5,000.00.

What to look for in a tax preparer

There are several factors that you need to consider in a tax return preparer, which are listed below.

1. Local is not always better.  Just because you can sit with the tax return preparer does not mean he will do a better job.  He has to be an expert in church and ministry tax to do the best job.  When it comes to taxes, knowledge is better than local.
    
2. Interview the preparer:  Of the many questions you could ask him, one question is above them all: "Will you help the church board strategize the housing allowance designation to maximize tax credits and refunds?"  Bean counters never do that.  They just document what happened the previous year without concern or knowledge that with a little planning thousands could be saved or refunded in taxes.  A good preparer consults with the church board and makes recommendations on how much to designate as housing allowance to make sure the minister lands in the EIC sweet spot.  If he cannot answer the above-mentioned question, kindly move on.  It should not be called a tax practice because he practices on you.
    
3. Will he be there for you next year?:  A very common problem today are the here-one-day-and-gone-the-next tax practices.  How much experience and how long have they been doing taxes are two good pieces of information to know.  You need to be certain that he will do them again next year.  Do a BBB search on him and find out how long he has been in business and what his ranking is with the BBB.  We are very proud to say that our score is and A .

Final word on taxes

Taxes do a lot to reveal what is in our heart.  People all over the world hate paying taxes and go to great extents to avoid them.  But, do we so dislike paying taxes that we lie to avoid them?  That we cannot do!  Jesus commanded us to pay our taxes.  On two different occasions, once in the gospel of Matthew and once in the gospel of Luke, Jesus addresses taxes.  In Matthew, He orders His disciple to pay an unfair tax, but He also provided for the tax payment by putting a coin in the mouth of a fish.  In Luke, He orders those who are listening to "render to Caesar what belongs to Caesar."  In order to know what is owed, one has to plan and calculate how much is owed.  These two occasions tell me a lot about what the Lord thinks about taxes.  "God loves a cheerful giver."