Pastors Taxes and Travel Expenses

Travel expenses can be a deductible expense when it comes to submitting yearly income tax for ministers. This applies to both self-employed ministers as well as ministers that are considered employees of their churches. It’s important to note, however, that deductions are treated differently based on whether pastors are considered self-employed vs. employees.

Travel expenses can be considered a business expense on pastors taxes and therefore deductible if they are run-of-the-mill expenses incurred while traveling for official pastoral duties only. Similar to other non clergy taxes, these expenses must come with a receipt and proper accounting records which include date of expense, amount, purpose and payment method.

Planned travels such as annual conventions and conferences should be marked as anticipated travel expenses in the board minutes at the first official board meeting of the year. All unplanned travels need to be authorized by the board before the trip. Additionally, any travel outside of the U.S. may be subject to a special business expense allocation IRS investigation. Therefore all records must be kept and church board approval within meeting notes is necessary.

Reimbursed Expenses

All travel expense reimbursements on pastors taxes are tax exempt which applies to both ministers and spouses. Reimbursements or travel expenses without a receipt can be deducted on IRS Form 1040 Schedule A, Miscellaneous Deduction when filing income tax for ministers. However, the deduction is subject to 2 percent of the adjusted gross income and 50 percent meals and entertainment limits.

When travel expenses are paid by expense accounts provided by the church, all funds provided above of the actual cost of the travel expenses must be claimed as income for ministers.

Non-reimbursed Expenses

All non-reimbursed travel expenses can be claimed on IRS Form 2106 for ministers considered employees and IRS Form 1040 Schedule C for ministers considered self-employed, and are subject to the 50 percent meals and entertainment limits, and then recorded as a deduction on IRS Form 1040 Schedule A, Miscellaneous Deductions form.

By keeping these guidelines in mind, accurately reporting travel expenses when filing income tax for ministers can be a simple task.