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 use, as well as total miles.

Pastors that are considered church employees on their pastors taxes are able to claim deductions for car expenses that are not reimbursed and furthermore, employee expenses that aren’t reimbursed are considered miscellaneous itemized deductions and only the part that exceeds 2 percent of adjusted gross income is tax deductible. If a pastor is considered self-employed they can claim car expenses for business-related activities as well as other business related expenses as deductions against their self-employment income. 

If a pastor chooses to deduct actual car expenses this includes costs for fuel, oil, repairs, tires, insurance, and registration fees. Tax deductible expenses are the percentage of vehicle miles driven for business purposes. The pastor may also apply the percentage of business use to car payment expenses which is either the interest of loan payments or total lease payments.

If a pastor chooses to claim a vehicle deduction using standard mileage instead they use the standard mileage rate multiplied by the business miles. The IRS provides standard mileage rates. Self employed pastors can add to the standard mileage rate deduction the cost of the business use percentage of interest payments for the vehicle purchase.

The government lets a pastor choose each year if they prefer to use actual expenses or standard mileage rate. This choice requires that a pastor use the standard mileage rate in the first year that a vehicle deduction is claimed.  However, pastors are encouraged to check with a tax services professional for advice in regards to their specific circumstances.

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Sarah Wozniak

Staff Writer, Page1 Online Marketing