During the summer months, ministers and their families often travel together. Sometimes a minister is able to combine a trip that is partially for vacation, and partially for a legitimate business purpose, such as attending a ministry-related conference or seminar.
As long as the portion of the travel that is legitimately for business purposes is reported in accordance with the church’s approved accountable reimbursement plan, then those expenses can be paid or reimbursed by the church without tax implications to the minister.
However, the situation becomes more complex if the minister’s family members also participate in the trip. A common assumption is that if the minister’s spouse accompanies the minister for the portion of the trip that is business-related, then the spouse’s expenses may also be paid or reimbursed by the church without any tax consequences. Generally speaking, this is not the case.
A minister’s spouse or other family member does not have a legitimate business purpose for attending a ministry conference or seminar solely because that person is a family member of the minister. The fact that the event would provide an opportunity for the spouse or family member to rest and refresh themselves is not sufficient to give rise to a legitimate business purpose. In fact, rest and refreshment are words that suggest the real purpose of the trip is to vacation rather than to conduct business. This is true even though ministry is a profession that frequently creates significant stress not only for the minister but also for the minister’s family.
There are some exceptions to the general rule that a spouse or family member does not qualify for expense reimbursement from the church. First, If the spouse or family member is also employed by the church, and the travel expenses are related to an event that would qualify as a legitimate business expense for that person independent of their relationship with the minister, then the expense can be paid or reimbursed by the church.
Second, if the spouse’s attendance at an event truly serves a legitimate business purpose, then the expense may qualify to be paid or reimbursed by the church without tax consequences. For example, if the spouse has official duties at a denominational convention, then it is plausible to argue that the spouse has a legitimate business expense for attending with the minister. Many situations are difficult to determine when it comes to whether the spouse or family member has a legitimate business purpose for accompanying the minister. The best practice is to consult with a tax professional to determine if a specific expense would qualify as a legitimate business expense of a spouse who is not employed by the church.
Notwithstanding the discussion above, a church may still choose to provide funding for a spouse or family member to travel with a minister, but absent one of the exceptions noted, those funds should be reported as additional compensation to the minister on Form W-2.
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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