Claiming Car Payments on Pastors Taxes

When it comes to deductions on taxes, the list can be long and varied depending on your occupation. This is especially true when it comes to pastors taxes. Items such as medical expenses, mortgage interest and travel expenses usually top the list. However, car payments are another standard deduction that should be kept in mind when preparing clergy tax forms.  

Business use of a vehicle is a deductible expense that can be claimed on a tax return for pastors. Members of clergy that use a vehicle for both business and personal use can deduct the cost associated with business usage. They cannot, however, claim a deduction for all car expenses including total car payments. A business mileage log should be kept in addition to a total miles log. A pastor must choose a vehicle deduction using a standard mileage rate or the business use percentage of actual costs.

Actual Expenses

If a pastor chooses to deduct actual car expense, they must determine the costs incurred for fuel, oil, repairs, tire, insurance, registration fees, etc. The tax deductible expenses are the percentage of vehicle miles driven for business reasons. The pastor can then apply the percentage of business use to car payment expenses. This is the interest aspect of loan payments to purchase the car of the total lease payments for a car financed by a leasing agreement.

Mileage

When it comes to tax preparation for car payment tax deductions a pastor can claim a deduction using the standard mileage rate multiplied by the business miles. The IRS provides the standard mileage rate. Independent contractors can add to the standard mileage rate deduction the business use percentage of interest payments for financing the vehicle purchase.

Choosing

The government allows you to choose each year if you would rather use either actual expenses or the standard mileage rate to claim a car deduction. However, they do require using the standard mileage rate in the first year that a vehicle deduction is claimed. Also, parking fees and tolls when using the car for business purposes are claimed as an additional deduction when using either actual expenses or the standard mileage rate.

Claiming car payments on pastors taxes is a complicated process, therefore it’s always recommended to speak with your tax preparation advisor.

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Sarah Wozniak

Staff Writer, Page1 Online Marketing

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