It’s tax season. And with tax season comes a lot of questions. How do I know if I have to file taxes? What filing status should I choose? What income do I have to pay taxes on? If you have any of these questions, visit the IRS frequently asked questions page or another online resource. But these pages won’t answer all your questions.
One question many Christians ask is whether or not you should tithe on your tax return. Your tax return feels like bonus money, but does this mean it is extra cash that doesn’t need to be tithed? Or should it be tithed just like any other paycheck?
First of all, remember that the purpose of tithing is not the amount of money you give. God can do with 1 percent of your income what can be done with 10 percent or 50 percent. Yes, 50 percent of your income will look much better when you hand it over to your local church. But the purpose of tithe is not to make you look good. The purpose is strengthening your relationship with God by helping others.
If you are stressed about whether or not to tithe on your tax return because you believe you will be punished by God for not giving a full 10 percent, you have missed the point. Nevertheless, it is nice to have exact numbers when it comes to money. Sometimes it is nice to make sure you give a full 10 percent simply because you truly want to give, or it helps you create a more defined budget.
Do you tithe on your net income or gross income?
In order to determine whether to tithe on your tax return, you must answer a question about the previous year. Did you tithe on your net income or gross income?
If you tithed on your net income, this means you tithed on the money you received after deductions. If you work at a job with a standard paycheck, this would be the money that made it to your bank account. This excludes money used to pay taxes, FICA, retirement, insurance, and any other deductions.
When you receive your tax return, it is a portion of the money taken for taxes. If you pay tithe on net income, then this money has never been tithed, so you can treat it the same as any other paycheck. If you want to ensure you pay a full 10 percent, give 10 percent of your tax return.
The most effective way to ensure you are giving a full 10 percent of your income throughout the year is to tithe on your gross income. If you tithed on your gross income, it means you paid your tithe based on the total amount of money you earned before deductions such as taxes, FICA, retirement, and insurance.
Your tax return is a reimbursement of some of the money you earned. This means if you tithed on your tax return you would be tithing on the same money twice. Unless you would like to give more than 10 percent, there is no need to tithe on your tax return after you have tithed on your gross income.
(If you need a more in-depth explanation of what the difference is between tithing on net income or gross income, here is an article that will answer this question for you.)