Tax Deductions

Clergy Taxes: Tax Advantages for Ministers

Working as a minister has many benefits, including reaching out to and ministering to a wide array of people who are seeking help and guidance. In addition to helping others, members of the clergy are also eligible for a number of tax benefits as well. These benefits were created for members of the clergy in order to ensure that they were being reimbursed adequately for the important work that they do. Therefore it’s important that pastors are aware of the tax advantages that they are eligible to receive.

Here are some of the tax advantages that can be applied to… Continue reading

Tax Breaks on Minister Taxes

Accounting for tax breaks when figuring and submitting minister taxes can be quite complicated. The government has allowed for a number of tax benefits for members of the clergy that are not available to taxpayers outside of the clergy. These tax breaks were originally created to help members of clergy who were poorly paid. There are actually a number of lucrative exemptions that ministers should be aware of including a housing allowance that can reduce a minister’s tax burden quite effectively.

Here are some common tax benefits that ministers have access to as long as certain IRS qualifications are met.… Continue reading

Clergy Tax Tips: Keeping a Vehicle Mileage Log

As mentioned in a previous blog post in regards to pastors claiming their car payments as tax deductions, a pastor must choose what vehicle deduction they prefer: a vehicle deduction using standard mileage rate or the business use percentage of actual costs. Therefore, when it comes to vehicle deductions, pastors are encouraged to keep a mileage log for business use that includes total miles.

Current tax law requires proper record-keeping when it comes to deducting business use of your vehicle and if a pastor chooses vehicle deductions based off of standard mileage, consistent logging of mileage will save them time… Continue reading

Vehicle Deductions for Pastors

When it comes to tax preparation, appropriately deducting car expenses is an important aspect no matter what your profession, even pastors. If a pastor uses a vehicle for business and personal reasons, they are able to deduct the costs that are involved with the business use of that car. They cannot deduct expenses used for personal reasons including car payments.

A pastor must choose what vehicle deduction they prefer: a vehicle deduction using standard mileage rate or the business use percentage of actual costs. When it comes to vehicle deductions, pastors’ are encouraged to keep a mileage log for business… Continue reading

Tax Preparation: Tax Deductions on Business Gifts

When it comes to being a professional or owning a business, there are many circumstances that warrant gift giving. This also applies to clergymen. As a result, the IRS allows business owners including clergymen the ability to deduct expenses for small gratuities and gifts. Gifts given in a professional capacity are often given in order to build goodwill between a business or leader and clients, prospects, congregation, vendors, or employees.

When it comes to determining tax deductibility for these gifts, the IRS publications 535 and 463 outline the rules and guidelines but in general the dollar value of a gift… Continue reading

How a Housing Allowance Works on Minister Taxes

Ministers provide an array of services for members of their churches as well as for their communities. Many believe that ministers are under-compensated for the selfless work that they provide and as a result the IRS has given clergymen certain tax-exempt benefits on their taxes including a tax-exempt housing allowance. All expenses for housing including furniture and maintenance can be legally deducted as long as ministers plan accordingly in advance and provide the IRS with detailed and adequate record-keeping. And while minister taxes allow for a housing allowance that is exempt from federal and state income taxes, it is still… Continue reading

Figuring Individual and Minister Taxes: Church Donation Tax Laws

Tis the time of year for charitable contributions for individuals, clergymen and churches, but how are charitable donations supposed to be accounted for in regards to taxes?  The IRS actually allows taxpayers to itemize their deductions to write off their donations to charitable organizations; however, the church or organization that is being donated to must meet IRS requirements.

In order to prevent people from taking advantage of this deduction they have created certain rules that govern the timing of donations, maximum allowable deductions and certain documentation is required.  When preparing individual as well as minister taxes, it’s important… Continue reading

Tax Preparation for Ministers: Self-Employed vs. Employee

The life of a pastor can be difficult yet extremely rewarding. They have been called to minister to others therefore they do what they can to ensure that they are prepared  for whatever situations they are faced with. Until it comes to minister tax issues. These are issues that they must deal with but usually aren’t prepared for.

Many minister tax issues are hinged on whether or not they are considered self-employed or an employee of their church. The difference between the two makes a big difference when it comes to yearly tax preparation, as well as how deductions… Continue reading

Determining Housing Allowance on Minister Taxes

There are a number of tax exemptions that ministers can benefit from as long as ministers are aware of these exemptions. One of the most common is a tax exempt housing allowance. All expenses for housing which includes furniture and maintenance can be deducted legally. Here is how to determine if you are eligible and how to go about it. 

Determine Eligibility

A minister is defined by the IRS as a person who is “duly ordained, commissioned, or licensed minister of a church.” Religious employees that don’t have these credentials are not eligible for the housing allowance.

Deductions

Once… Continue reading