Which expenses and losses are deductible from a person’s income before separating Maaser (tithe of our income) to charity, and which are not?
Before answering this question, we must acquaint ourselves with one of the basic underlying principles of our Maaser obligation. To quote Rabbi David Oppenheim (1664-1736. Author of Shaalos U’Teshuvos Nishal L’Dovid. This quote can be found in Sefer Maaser Kesafim, edited by Dr. Cyril Domb, page 61), “Regarding financial Maaser, a person is a (9/10) partner with Hashem in his income. When it comes to deducting expenses, a person may deduct any expenses or losses that occur in his business as long as they are not due to his negligence, for there is a mutual liability (between the business and Maaser) …therefore any expenses incurred in earning the income, including any clothing that must be purchased for a business related journey, may be deducted”.
This concept of a person being a partner with Hashem has direct ramifications on what expenses may be deducted from our income before setting aside Maaser, and on the distribution of Maaser funds. We are only going to discuss the former in this class.
- Money spent by a person to enable him to earn an income, may be deducted from his income before separating Maaser, even if it was used for this purpose unsuccessfully. Any expenditures or losses that are not for the purpose of producing more income are considered a person’s private income, and Maaser must be separated from these funds.
- In light of the above, the following may be deducted from the gross income before separating Maaser by a self employed business owner: Wages paid to an employee, any inventory related expenses, cost of leasing property or vehicles, advertising, and any business related taxes.
Any financial loss caused by theft, loss, or broken machinery may also be deducted, as long as it is not due to negligence on the business owner’s part.
However, if property or vehicles were purchased for the business, the money used for this purpose is not considered a business expense, rather it is a capital investment, and Maaser must be paid on it. Depreciation of these items due to normal wear and tear may be deducted. Obviously, the cost of maintaining these items may also be deducted.
- Employees may deduct from their wages any income taxes, child care costs that are necessary to enable them to take a job, transportation costs to and from work, and the cost of any educational courses that they must take to enable them to function properly on the job. However, expenses incurred in hiring cleaning help for the home may not be deducted, even though it would be difficult to keep a job and clean the home without extra help, unless it would be objectively determined that the person would be totally unable to earn an income without this help.
- If a person is involved in two businesses, and made a profit in one but took a loss in the other, or if he received an inheritance or present but had a business loss, if he makes a Maaser accounting for both at the same time, he may deduct the loss from his overall income and only needs to pay Maaser on his net gain from both businesses.
If he made a Maaser accounting on his profit and only suffered the loss in the other business afterwards during the same year, there is a difference of opinion whether or not the loss may be deducted from the pre-Maaser income. The preferable method of dealing with this situation is to stipulate in the beginning of the year that he will give Maaser only on his net income after all expenses for that year.
For the benefit of those interested in delving further into this topic, we will mention some sources worthwhile looking into. See the Shaalos U’Teshuvos Shaar Ephraim (84), Chut HaShoni (90), Shvus Yaaakov (Vol. 2 Siman 86), and Avkas Roechel (3). See also the Pischei Teshuva (Yoreh De’ah 249:1), Nodeh B’Yehuda (Yoreh De’ah Vol. 2 Siman 199), Chavos Yair (224), and Ahavas Chessed (Vol. 2 18:2).
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This week’s class is based on a column by Rabbi Tzvi Shpitz, who is an Av Bais Din and Rosh Kollel in the Ramot neighborhood of Jerusalem. His Column originally appears in Hebrew in Toda’ah, a weekly publication in Jerusalem. It has been translated and reprinted here with his permission and approval.
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Please Note: The purpose of this column is to make people aware of Choshen Mishpat situations that can arise at any time, and the Halachic concepts that may be used to resolve them. Each individual situation must be resolved by an objective, competent Bais Din (or Rabbinic Arbitrator) in the presence of all parties involved!