If your church does not reimburse you for your out-of-pocket ministry-related expenses, you can deduct them on your return. They are deductible only if they are ordinary, necessary, and reasonable ministry expense. Please find a few examples below.

Ministry-related travel, transportation, meal, and entertainment expenses

Professional liability insurance premiums

Computer or cellular telephone your church requires you to use in your ministry

Professional Dues

Education that is work related

Subscriptions to professional journals and trade magazines related to your ministry

Tools and supplies used in your ministry

Professional clothes and uniforms (if required and not suitable for everyday use).

Any reimbursement you receive from your church should be made under an “accountable plan.” An accountable plan is a set of procedures that ensures that employees don’t get reimbursed for personal expenses. In brief, you must: make an “adequate accounting” of the expense—that is, follow all the applicable recordkeeping and other substantiation rules for the expense; for example, you must keep receipts (except for travel, meal, and entertainment expenses below $75; or travel and meal expenses paid on a per diem basis) timely submit your expense report and receipts to the church, and timely return any payments that exceed what you actually spent for job expenses.

If you fail to follow the rules, any reimbursements you receive must be treated as employee income subject to tax. Thus, the church must include them on your W-2. You’ll then have to deduct the expense on your personal tax return.

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

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