Discussion:Ethical delima - take clergy housing allowance when they didn't actually live there?
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Discussion Forum Index --> Tax Questions --> Ethical delima - take clergy housing allowance when they didn't actually live there?
| 15 April 2008 | |
| I often help my family members prepare their tax returns. One of my family members is a minister, so she is able to take a lot of deductions against her church-given housing allowance. As far as the housing allowance goes, only an amount exceeding her actual housing expenses is taxed.
At the end of 2006, she moved out of the home she owns, and into her boyfriend's home. Her daughter and son-in-law have continued living there. She has left her address be the home she owns, on her driver's license, her paychecks, all of her bills, and is planning on using that address on her tax return. I am unsure whether I should be comfortable preparing a return that takes a lot of deductions against her church-given housing allowance, when it's all for an address she didn't really live at. What would you CPAs do, if you had a client trying to deduct housing expenses such as their mortgage and utilities against a clergy housing allowance -- when you knew they didn't in fact live there? | |
| 15 April 2008 | |
| 1) FYI - you will find many excellent opinions on this site from non-CPAs.
2)Just pulled this from one of my research things: In order for a rental allowance to be excludable, it must actually be used to rent or otherwise provide a residence. Even though such an allowance doesn't exceed the fair rental value of the home, it isn't excludable where the clergyman owns his own home and doesn't spend any part of the allowance for mortgage payments, insurance, taxes, utilities, maintenance, repairs, improvements, fixtures, appliances, or furnishings for the residence. Swaggart, Jimmy, (1984) TC Memo 1984-409 , PH TCM ¶84409 , 48 CCH TCM 759 The key part is "provide a residence". In your case I would read that as "provide a residence for her". She may still be able to deduct some of the expenses she pays at her boyfriends (utilities, maintenance) but probably not much. I would appeal to her ethical side: present her the above info and ask her to think about what she wants to do. If she asks you how much it will cost her tell her that shouldn't matter - what should matter is if she is entitled to the benefit. Hopefully she will agree. If not, I would tell her that I am not comfortable (assuming you aren't comfortable) filing a return like that (mention the $5,000 preparer penalty for fraud). That's my penny's worth | |
| 15 April 2008 | |
| What would the ethics of a minister who lives with someone out of wedlock be ? | |
| 15 April 2008 | |
| I don't know what the CPAs would do, but an ethical Enrolled Agent would not accept the engagement if the client wanted him/her to prepare the taxes fraudulently. | |
| 15 April 2008 | |
| Lord, we have another Amy Grant on our hands here. Of course, Jesus was never married, and spent a lot of time over at Martha's and Mary's place. Lazarus usually supervised, except that time he was dead (and that was just for a couple of days).
She seem's to be attempting to render neither unto Ceasar, nor God. But, Rodge, since you are most definitely accountable to Ceasar for all information of which you have any knowledge, you must de-frock her for filing purposes, or refuse to take on her engagement, err the engagement. | |
| 15 April 2008 | |
| Sounds like she went to the James Baker PTL or "Pass the Loot" School of Ministry.
My buddy CrowJD is on the money. She isn't doing what the Good Book is telling her to do. I would say goodbye to the minister. Tom | |
| 15 April 2008 | |
| if you don't get it, then you are too busy with tax think to think about words | |
| April 15, 2008 | |
| Actually, ¡A Dios! is my sign off everywhere else. I break it up to make a pun in Spanish, the heavenly language. "To God" literally. That's just where I would indeed send her. They need to visit together. | |
| April 15, 2008 | |
| Ah! Never realized that. So in both languages, we know where she should go. | |
| 15 April 2008 | |
| yup, and now everyone else who reads this will be enlightened
we're just two little rays of sunshine in the world of dark and cloudy tax preparation, aren't we? | |
| 15 April 2008 | |
| And I want to thank you both for being a "ray of sunshine" It is good to finally be able to smile - it's 4 o'clock and I "think" I'm done. Have a good evening everyone :-) | |
| 16 April 2008 | |
| I read everyone's responses throughout the day. Thanks everyone for them.
The overwhelming consensus confirmed to me that she can't offset expenses for the house she owns that she doesn't stay at daily against her giving housing allowance. I told her that in contrast to last year's taxes, since she lived there until the end of 2006, that I couldn't prepare a return using those expenses. I wound up filing an extension for her. She may be going elsewhere, but then it's out of my hands. Thanks again, everyone, for confirming that I wasn't incorrect in my initial thoughts, that this year she isn't entitled to use the expenses she wants to. Also, DLLCPA, thanks for your extended response with your previous research findings! | |
