relationship and meeting at the time and place of the expenditure. This is a gray area on many tax returns. For more information, you should familiarize yourself with IRS Topic 512 and Publication 463.
2. Travel: Work-related travel, e. g. hospital and nursing home visits, are deductible. However, documentation is very important. Mileage logs should be meticulously maintained and always include:
• Travel date
• Place of travel
• Business purpose
• Relationship to the individual with whom you met, i. e. church member, attorney,
• etc.
• Miles traveled
• A running balance of miles traveled, i. e. odometer readings for every trip
3. Education: Does your church or regulation require you to have specific or additional education; or do your educational pursuits improve or maintain your skills, so that you may keep your job? If so, then your tuition, books, supplies( even correspondence courses) are tax deductible.
4. Fees / Dues / Subscriptions: Subscriptions to professional journals and religious publications, dues to professional organizations and / or societies, and seminar and conference fees are deductible.
5. Clothing: Robes and vestments are deductible. The qualifier is these garments are generally not worn for occasions other than ministry, i. e. your business suits are not deductible.
6. Resource Books: Religious books and publications such as theological dictionaries, concordances, etc.
7. Housing Allowance: The allowance for housing is excluded from Federal Income Tax. So, it’ s considered the greatest tax benefit available to ministers. The housing allowance is a calculated portion of a minister’ s compensation. While it is excluded from your Federal Income Tax, it is not exempt from your Self Employment Tax( Social Security and Medicare). There are subtle intricacies to properly setting up and maintaining a housing allowance.
• The Housing Allowance must be board-approved before it is paid( a housing allowance is never retroactive)
• You must spend the allowance on eligible housing expenses during the year, i. e. rent / mortgage payments, mortgage interest, home insurance, utilities, property tax, etc.
The housing allowance calculation is supported by the forecast expenditures provided by the you, the minister. Thus, it is the your responsibility to ensure that the calculation is properly and accurately adjusted annually.
If you are provided a parsonage to live in by your church, you are not subject to income taxes on the use of the parsonage. However, the fair rental value of the parsonage( you make the determination of that value) is added into the calculation of your self- employment tax. If the utilities are paid by the church, then those expenditures are also added into the calculation of selfemployment tax.
Ministers who are classified as an employee are limited to
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