Reimbursement Policies
Many religious organizations have made fixed sum monthly payments to their minister or other staff for a “travel or professional allowance” and do not request an accounting for how the money was spent. Allowance plans are always taxable are reported on Form W-2.
It is strongly recommended that the congregation establish an Accountable Reimbursement Policy. Under such a policy, the staff is reimbursed within 30 to 60 days for expenses advanced on behalf of the congregation, with reasonable documentation where appropriate. IRS regulations specify that receipts should be provided for expenses over $75. One way of segregating business expenses is for the staff member to charge them to a credit card used solely for this purpose. The church then pays the credit card statement as it would any other monthly expense, although the credit card statement in and of itself may not be sufficient documentation.
Any excess funds that have been advanced to a professional or employee for a trip or special purpose must be reimbursed back to the congregation within 60 days or should be declared as additional income.
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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.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (888) 421-0101
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com