A minister who is classified as an employee may claim his or her unreimbursed expenses only as a miscellaneous itemized deduction on Form 1040 Schedule A. These expenses are deductible only if, and to the extent, they and any other miscellaneous itemized deductions exceed 2% of the minister’s adjusted gross income (AGI).
A few common tax deductions for ministers include:
Local Transportation: Deductible transportation costs may include trips for hospital and nursing home visits or for other church business. However, trips between a minister’s personal residence and the church are considered nondeductible commuting expenses. Ministers may deduct trips by car or public transportation. There are two methods to keep track of car expenses: recording all car expenses including how much is spent for gas, oil, repairs, car washes, and so forth; or using the standard mileage rate. With the standard rate, the minister need only keep track of how many miles he or she drives for church business.
Travel: A minister may incur travel away from home occasionally for special conferences or other duties out of the area. The same rules regarding the deductibility of meals, entertainment, and lodging apply as for other taxpayers. These expenses include airfare or other transportation costs and hotel or other lodging expenses. But, only 50% of the cost of meals when traveling on church business may be deducted.
Supplies: Ministers may deduct out-of-pocket costs for office supplies.
Publications: Ministers may also deduct the cost of job-related books and periodicals for which they are not reimbursed.
Dues and Contributions: Ministers often pay a small annual renewal fee to maintain their credentials–this is a deductible expense. However, ministers’ contributions to the church are not deductible as business expenses. These are deductible only as charitable contributions, not business expenses. The difference is that charitable contributions are a personal itemized deduction, while business deductions are directly deductible on Form 1040 without itemizing.
Clothing: Ministers may deduct the cost for special vestments–these qualify as uniforms for tax purposes. The cost of care and cleaning of vestments is also deductible.
Telephone: Unreimbursed long distance phone calls made for business purposes are deductible.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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