Meals related to ministry activities can be deducted for tax purposes under certain conditions. The relevant IRS guidelines and criteria for deducting such expenses, including specific requirements or limitations that apply to clergy or ministers, are as follows:

1. Ordinary and Necessary Business Expenses:

   • Under § 162(a) of the Internal Revenue Code, ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business are deductible. This includes traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business.

2. Specific Criteria for Deducting Meals:

   • Meals can be deducted if they are directly related to the active conduct of the ministry or if they are associated with a substantial and bona fide business discussion.
   • The cost of meals must be reasonable and not lavish or extravagant under the circumstances.

3. 50% Limitation:

   • Generally, only 50% of the cost of business-related meals is deductible. This includes meals incurred while traveling away from home on business and meals for business customers at a restaurant or other location.
   • Taxes and tips related to a meal are included in the amount subject to the 50% limit. However, the cost of transportation to and from an otherwise allowable business meal is not subject to the 50% limit.

4. Accountable Plans:

   • If meals are reimbursed under an accountable plan, the reimbursement is not included in the employee’s income, and the employer can deduct the reimbursement as a business expense. An accountable plan requires the employee to substantiate the expenses and return any excess reimbursement within a reasonable period of time.

5. Nonaccountable Plans:

   • If meals are reimbursed under a nonaccountable plan, the reimbursement is included in the employee’s income, and the employer can deduct the reimbursement as wages.

6. Documentation and Substantiation:

   • Adequate records must be kept to substantiate the time, place, and business purpose of the meal expenses. This includes keeping receipts and a log of the expenses.

7. Special Rules for Ministers:

   • Ministers can deduct unreimbursed business expenses, including meals, on Schedule SE (Form 1040) for self-employment tax purposes. However, these expenses are not deductible in arriving at adjusted gross income unless they are of the type described in section 62(2) of the Code, such as travel expenses.

By adhering to these guidelines and criteria, ministers can ensure that their meal expenses related to ministry activities are properly deducted for tax purposes.

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Clergy Financial Resources
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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.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101
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