A member of a spiritual order says the election of Pope Leo XIV might deliver Individuals again to church.
Will Pope Leo XIV must file and pay U.S. taxes, regardless of his strict vow of poverty?
Leo is the primary American pontiff in historical past. And U.S. residents, regardless of the place they dwell or who they’re, are required to pay tax on their worldwide earnings—in the event that they owe any.
Even when they don’t owe tax, they might must file a return with the Inside Income Service. And whether or not it’s the pope or the remainder of us, there are good causes to file regardless of not needing to. This 12 months, the submitting threshold is $17,000 of gross earnings for a single taxpayer who, like Leo, is age 65 or older.
Newly elected Pope Leo XIV seems on the balcony of St. Peter’s Basilica, on the Vatican, on Could 8, 2025. (REUTERS/Guglielmo Mangiapane / Reuters)
For the Chicago-born pope, nevertheless, there are uncommon circumstances that might exempt him from owing and even submitting U.S. taxes.
Right here’s the background: Within the Roman Catholic Church, guidelines in regards to the possession of property and earnings by Catholic clergy and members of spiritual orders range extensively. Not all take vows of poverty, and a few poverty vows are stricter than others.
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Members of the Order of St. Augustine, which Leo entered as Robert Prevost in his 20s, take the strictest vow of poverty, referred to as a Solemn Vow. On the night time earlier than they be part of the Order as full members, they signal a doc renouncing their proper to personal property and saying they flip over all their items to the Order.
Newly elected Pope Leo XIV, Cardinal Robert Prevost of the US seems on the balcony of St. Peter’s Basilica, on the Vatican, Could 8, 2025. REUTERS/Guglielmo Mangiapane (REUTERS/Guglielmo Mangiapane / Reuters)
The Wall Road Journal reviewed the pope’s renunciation, which he signed in 1981.
Fr. James Halstead, treasurer of the Midwest Augustinians that Leo joined, says that if a member earns a wage from educating, it’s usually paid on to the Order, which is a tax-exempt group. Which means that members don’t have taxable earnings.
If an Augustinian receives a present or different earnings, he relinquishes that as properly. Halstead provides that when the now-pope grew to become a cardinal, he turned over a beneficiant sum he acquired as a present.
As well as, members don’t personally pay into Medicare and Social Safety. As a substitute, the Order pays the levies from its earnings on behalf of them.
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Consequently, Augustinians don’t file particular person U.S. tax returns, and Halstead says the Order has no file of Leo’s submitting any returns. The IRS permits this; for extra info, see IRS Publication 517 for clergy.
Be aware: Not all vows of poverty result in a tax exemption. The IRS has pursued and gained circumstances involving vows of poverty that it questioned.
Different dialogue about Leo’s U.S. taxes has centered on potential earnings—not the strict vow of poverty that might imply he has no earnings or duty to file.
Pope Leo XIV shakes arms throughout an viewers with representatives of the media in Paul VI corridor on the Vatican, Could 12, 2025. (Reuters/Eloisa Lopez / Reuters)
Now that he’s pope, Leo and his advisers want to think about what to do going ahead. The pope stays an Augustinian, and Halstead hopes he can proceed his previous apply. In that case, any cost or stipend for the pope may go on to the Augustinians and he won’t have to file.
Vatican officers didn’t reply to a request for remark in regards to the pope’s pay or tax submitting. A spokeswoman for the Treasury Division additionally declined to remark, citing taxpayer-privacy legal guidelines.
If Leo determines that he has earnings and must file a U.S. return, he may face points that torment many Individuals residing overseas. The paperwork for expats is usually onerous, and guidelines to stop double taxation have gaps. Throughout his 2024 marketing campaign, President Trump advocated altering the principles, however the invoice permitted Wednesday by the Home Methods and Means Committee doesn’t contact them.
If Pope Leo XIV determines that he has earnings and must file a U.S. return, he may face points that torment many Individuals residing overseas. (Andrew Harrer/Bloomberg / Getty Pictures)
If he does file, Leo would seemingly profit from the Overseas Earned Earnings Exclusion, a tax break that shelters earnings by Individuals overseas. For 2025 the restrict is $130,000 for a single filer—however to say it, a taxpayer has to file.
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As well as, Vatican officers have to verify whether or not Leo ought to file types notifying U.S. authorities of sure overseas accounts or belongings he has an curiosity in. The FBAR kind usually applies to expats with overseas monetary accounts totaling greater than $10,000 through the 12 months, whereas IRS Kind 8938 applies to varied overseas monetary belongings of larger worth.
One factor the pontiff in all probability doesn’t want to fret about is owing U.S. tax on the worth of his lodging, meals, journey, clothes and different bills paid by the Vatican. Michael Graetz, a former Treasury official and emeritus professor at Yale Legislation College, says that within the pope’s case they don’t rely as taxable earnings as a result of they’re a situation of his employment.
Pope Leo XIV holds an viewers with representatives of the media in Paul VI corridor on the Vatican, Could 12, 2025. (Reuters/Eloisa Lopez / Reuters)
Even when the pope isn’t required to file a U.S. tax return, some tax professionals advocate that he—and different Individuals with little to no earnings—file anyway.
One purpose is that submitting a return is usually a good approach to forestall tax ID theft. This happens when a fraudster makes use of another person’s Social Safety quantity and date of delivery—just like the pope’s—to faux a refund for themselves. Tax ID theft is cumbersome to unwind, and repeatedly submitting returns makes it tougher for fraudsters to behave. Leo may additionally get a particular IP PIN quantity that forestalls anybody else from submitting along with his ID.
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Matthew Plese, a CPA in Chicago who handles tax filings for a lot of Catholic clergymen and members of spiritual orders, additionally advises his shoppers to file so the IRS may have a file of them. Through the pandemic, it was tougher for his clergy shoppers who hadn’t filed to get their stimulus funds, he says.
David Lifson, a CPA with Crowe who advises Individuals with world earnings, says there’s a extra necessary purpose to file. Submitting a return to the IRS prompts the statute of limitations, which doesn’t start to run till then. For typical tax points, the statute is three years.
He explains, “Filing a tax return is a way for Leo to show respect for his citizenship, and it actively affirms that he owes little to no tax.”
