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» Nauvoo Forum » NauvooTimes Forum » In the Village - Orson Scott Card » Tithing and taxes

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Tithing and taxes
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Dan Knudsen
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While working I deducted Social Security and 401k payments from my gross income before paying tithing. I’m retired and pay tithing on what is received from Social Security, Retirement, and my 401k. Since we raised 9 kids, we had a difficult time financially and couldn’t pay very much in Fast Offerings. We now give more to Fast Offerings each month than we previously did annually, and also contribute an equal amount to the Perpetual Education Fund, to make up for our previous deficiency. Recently our health insurance went from less than $120 per month to more than $800 per month, which makes it somewhat tight financially--but we’re used to that.
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A few years ago I made a large tithing-in kind and found myself with the accountants at the Church office building. It seemed a good time to ask some of the questions raised by Orson. Their only reply was D&C 119 3:5. They had no other comments. I find the best way to feel good about how much tithing is think not of the blessing I am "buying" but the good that is being done for others.
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A lot of retired LDS members are double tithing their pension benefits and social security and medicare benefits as they do not remember that they tithed their gross income before their employee contributions to FICA, Medicare and Pension plans. They forget that they tithed their contributions to these funds just like they paid tithing on the earned income they deposited to their savings accounts each year. FICA, Medicare & pension plans are the same as savings accounts up to the amount the employee contributed to them. If the employee paid tithing based upon their gross wage then for probably the first 5 to ten years of retirement they are receiving back their previously taxed corpus. The taxable difference can be significant for a first time retired person. Their first year total benefits could be as high as $100,000 but tithed benfits for the first year of retirement could be near $20,000. Retired people should start tithing their benefits once they have received their total contributions to each of these plans if they paid their tithing on their gross income over all the years they worked. Once they have used up all of their previously tithed benefits then they have a new increase for the now government paid benefits and earned income from remaining pension benefits. It could be up to 10 years before a retired person has benefits that were not previously tithed. Of course a person can donate whatever they want but consider a widower who has to make her benefits last for the rest of a lifetime then it can be significant. We have to wonder how much fast offering benefits are being paid out worldwide which really are returning 'current' year tithing payments on retirement benefits that were not income or 'increase' in the current year but a return of previously tithed retirement savings contributions to these plans and to FICA and medicare. Once the person has received back what they previously tithed then they are recieving an increase which would be tithed currently. You do not tithe withdrawals from your savings accounts where you annually tax the interest earned. It is the same with pension plans and social security and medicare payments in the first years of retirement until you receive back what you paided (and previously tithed).
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Am I the only one who has never heard the idea that you should discuss how you pay tithing with your bishop? I thought this was between me and the Lord. If I had a big problem, like Orson probably has because of not receiving a regular paycheck but having to figure tithing on amounts paid for his books, etc., I would discuss this with the bishop, but I can't see him being thrilled having people trooping in to see him to define what they should be paying.
And I agree with the CPA who says that if you paid tithing on Social Security, etc., you don't have to tithe your payments now until you have received all that you paid tithing on before. The only problem is that the dollars I paid into SS 40 years ago have been inflated, so it's hard to decide when I have actually received all I paid tithing on before, but I think the 5 to 10 year time frame he uses makes sense.

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I agree with the spirit of Card's message regarding tithing. I would only remind anyone reading this that people who live in high tax zones who pay 10% of gross income incur a much greater burden than those who live in lower tax regions. In fact, gross incomes levels vary from state to state for this very reason: states like California and New York pay higher incomes in part because of the higher tax burden. Therefore, it seem unfair to expect a greater tithe from those who only ever see the same amount of money in his or her bank account as those who live in a different state, only because of local tax laws. And that doesn't begin to account for the higher cost of living in such areas.

And what of Saints living in Western Europe, where the tax rate exceeds 50%? Do we expect them to pay more than 20% of what they actually see? And as those high tax areas of the world age, we can only expect marginal tax rates to further increase, ever burdening the up and coming LDS generation. Any sort of cultural pressure to pay tithing off of gross income would only pressure them to leave their native land entirely.

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Thats why I decided a long time ago to pay on what I receive each pay period. Then, after retirement when we draw from SS (if it's still around) or from our 401k or other savings, we will pay on what we draw when we draw it. Are we missing something, we hope not. We actually pay slightly more than 10% each pay period.

As to the medical insurance bit, how do you figure out what your employer pays, particularly if like me you are in the military where there is no matching amount or anything else. I have no deductibles, and can I really count it as increase? I can't spend it. I don't can't avoid doctors for a year and get money back. How do you monitize it to determine the 10%?

I understand those who say pay on the Gross, but then if you do you are double (or more) tithing on your retirement, or you are nickle and diming the Lord when you get this additional interest but miss that little bit there.

As for Tithing Settlement, I glance at the last pay statement before the meeting, see the net total and if my tithing total is equal to or greater I call it full. It is usually greater by a small margin due to our always paying a little bit more.

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Am I the only one who has never heard the idea that you should discuss how you pay tithing with your bishop? I thought this was between me and the Lord.
Of course it's between you and the Lord, as is virtually everything else in life. That doesn't mean we can't or shouldn't seek counsel from our priesthood leaders when we have trouble seeing clearly the way we should go.

I can't see him being thrilled having people trooping in to see him to define what they should be paying.
Whether he's thrilled or not is beside the point. And I don't think Brother Card is saying the bishop should be defining what we pay. Sometimes though, it's helpful to have an objective third party to help us see through the clutter so we're more able to make our own decision. For example a couple of years ago when my wife was on temporary disability due to illness, our bishop told us we shouldn't have to pay tithing on her state disability payments, using much the same reasoning as CPAOld used for Social Security. It had never occurred to us to not pay tithing on that money and would never have thought to even ask the question if a friend, an investment advisor with a stock brokerage, hadn't told us the same thing.
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I agree with CPAold. However, one item has not been addressed and I am curious what his and other opinions might be. If a person purchases a home (say for $200,000) and 10 years later sells that home for $300,000. Then, that person immediately purchases another home for $300,000, did that person experience a $100,000 increase and if so when should that increase be tithed? At the time of the sale? When the second home is sold if it ever is sold? Some other time?

If the $100,000 is deemed to be an increase, then should that increase be tithed each year (e.g. over the 10-year period, $10,000 of increase per year?). This assumes that during each of the 10 years a person would somehow know that his home had appreciated $10,000.

And, what about the reverse? If the same home were purchased initially for $200,000 and later sold for $150,000, did that person experience a $50,000 "decrease" that could be used to off-set earned income (increase) in the year of the sale?

I would be interested to hear from both Bro. Card and from CPAOld.

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A lot of retired LDS members are double tithing their pension benefits and social security and medicare benefits as they do not remember that they tithed their gross income before their employee contributions to FICA, Medicare and Pension plans.
You're right that some don't remember to didn't think about this. However, it also just doesn't matter to a lot of people. They don't feel they are paying double tithing because everything is the Lord's anyway. It may make a difference to the poor widow who is barely making it, but for most I think it will work out in the end. I also think it will work out in the end for those who don't pay "double tithing".

csgriff and Grandpa - those questions are the reason why it's so important that this is a matter between oneself and the Lord. Our income, our families, our place of living, out health etc is going to differ from everyone else.

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Retired people should start tithing their benefits once they have received their total contributions to each of these plans if they paid their tithing on their gross income over all the years they worked.
No, Retired people should follow the counsel in D&C 119 3:5. That allows folks to come to a different conclusion than you did.

I agree that whatever the conclusion ends up being, it ought to be based on a full understanding of the relevant facts.


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I was wondering how does paying tithing works for my mother. My mother is a widow and she draws off my dad social security. My dad already paid his tithing on the money he earned before taxes were taken out for 44 years. My mom didnt realize it and she had been paying tithing on the monthly checks she got since dad died in 2007. So it seemed that mom was paying tithing twice on the same amount of money. Also, would mom be able to still hold a recommend if she didnt pay tithing on her check.
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To hold a temple recommend one must be a full tithe payer, which is determined by that very same person. I know what I would do. It might be different from what you would do. I think God won't care about the differences as long as our hearts are pointed toward serving him. Your mother has to make up her own mind about it.

D&C 119
Verily, thus saith the Lord, I require all their surplus property to be put into the hands of the bishop of my church in Zion,

2 For the building of mine house, and for the laying of the foundation of Zion and for the priesthood, and for the debts of the Presidency of my Church.

3 And this shall be the beginning of the tithing of my people.

4 And after that, those who have thus been tithed shall pay one-tenth of all their interest annually; and this shall be a standing law unto them forever, for my holy priesthood, saith the Lord.

5 Verily I say unto you, it shall come to pass that all those who gather unto the land of Zion shall be tithed of their surplus properties, and shall observe this law, or they shall not be found worthy to abide among you.

6 And I say unto you, if my people observe not this law, to keep it holy, and by this law sanctify the land of Zion unto me, that my statutes and my judgments may be kept thereon, that it may be most holy, behold, verily I say unto you, it shall not be a land of Zion unto you.

7 And this shall be an ensample unto all the stakes of Zion. Even so. Amen.

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US citizens frequently do not realize how subsidized their social security benefits are. Her husband may have tithed on his gross, but the total part of the SS benefits that he tithed on is likely spent in the first five or so years of receiving benefits. If you are using tithing on everything (and I'm not saying this is the only way to calculate it), then your mom needs his SS projected payment amount from the year before he started taking benefits and then see whether he's received all of that back already, and he is working on what a younger worker is subsidizing (which is why we have to reform SS in order for it to continue to provide a safety benefit at all).
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Jean Valjean
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Trooth. Forgive this slight derail: You can expect to get back about 2-3 times what you put in to Social Security. No other retirement plan can promise returns like that.

Because only Ponzi schemes give returns like that. And only in the beginning.

I have been following the "fiscal cliff" discussion with dismay and disgust. No one deserves to be taken seriously whose plan for deficit reduction relies on increased revenue instead of reduced spending. An no one deserves to be taken seriously whose remarks on deficit reduction avoid mentioning entitlements. By this criterion, the only adults in the room in Washington right now are some of the Tea Party Congressmen -- who are being excoriated in just about every press report I've seen for not going along with the latest attempt to just kick the can a little further down the road.

There, got that out of my system. (Dons abestos suit.)

[ August 01, 2014, 12:31 AM: Message edited by: Jean Valjean ]

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I pay tithing on the gross of my pay when ever possible. That sounds bad, I know, but there are times when I am sure that I only pay on the net because that was the number that got suck in my mind and I misplaced my paystub or other such reasons. I dont think that the US Social Security payments iwll be there for me (I am 47 for the next 12 days). Unfortunatly I have nothing in savings due bad decisions, the tanking of the stock market so frequently over the last 4 years, my first husband and other things. I would love to say that I will pay tithing on any benifits I might recieve. All I really know is that I was taught to pay a tithe on my security, wages, self employment, sales of salvage or what ever.
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I know this is an old thread... but thought I would chime in.

Am a practicing CPA, and have found the old joke about economists to be applicable to CPAs... If you lined up all of the economists in the world, they would not reach a conclusion. So my conclusions may be different from others'.

To GrandpaK, I would say yes, there has been an economic gain/increase realized on the sale of the home. However, how does one tithe on this transaction after the fact? You can't take 3.3 percent ($10,000/$300,000) of the new house to the Bishop, and you can't let somebody needy live in 3.3 percent of the new house (well... maybe you could, but is that tithing?)

Probably the easiest way to handle it would have been to sell the house, pay $10,000 on the realized gain, and buy a $290,000 home. But, depending on where you live, there will be tax complications in handling the transaction in such a manner.

After the fact, since the home is already purchased, wait until you realize any increase (or loss) on the new home when you sell it.

When people came to my office to ask these kinds of questions (it never bothered me to get these questions - it meant people were trying to learn how best to be faithful - how can you get upset by such a question?) I described the principle in this manner. My children and I raise a sizable garden and have a flock of laying birds -- lots of fruits and vegetables and eggs. Everything we produce is titheable in the most ancient and classical senses. But we are no longer set up for the Bishop to take the literal fruits of our labors and the firstlings of our flocks. The Storehouse won't take our produce given our area ag/health requirements. We don't sell our goods, so we can't convert it to cash. Instead, we have widow neighbors and other neighbors who have fallen hard times and family, and when those people have received, we take a big basket of goods to Church and put the produce on a table in the foyer. We put up a little card... "If you need some, please take some."

We pay tithing on our net income because we don't have access to the dollars taken in tax or paid to 401K, etc. As we receive benefits, or tax refunds where we overpaid, we pay tithing on the dollars we receive. When we are finally allowed access to our 401K, we will pay tithing on the corpus and the interest without having to worry about how much we paid in the past, etc. We pay as much as we can in other offerings on the assumption that we can't really calculate the dollar amount for subsidized health care we receive, or subsidized mass transit benefits (since I ride the bus)... you could go crazy if you wanted to get all Law of Moses on this principle. This is exactly why the Church only refers us to the passages in the scriptures. We need to learn to be mature enough to figure this out on our own.

There are as many ways to tithe as there are to fast. All that matters is I am honest and honorable consistent with the knowledge I have at the time, and that I am constantly striving to increase my knowledge so as to improve when I learn better.

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It is of course between each person and the Lord and I think that leaders need to be less prescriptive as regards the counsel they give.
In my own case, I've always paid it on my gross pay and now I'm retired, I still pay it on my gross pension (which is not a lot different than the net pension as I don't pay a lot of income tax these days).
On the other hand, I never did pay it on the value of company cars, any profit we ever made on selling a house (that would have gone straight into the deposit for the next one) nor do I nowadays make a contribution for getting free public transport.

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