Tax Deductions for Clergy
Members of the clergy receive a Form W-2, Wage and Tax Statement, which lists the amount of salary earned, tax withholdings, and housing allowances. Any fees a clergyman charges for weddings, funerals, baptisms or other private masses are counted as self-employment and will need to be reported on a Schedule C, Profit or Loss from Business. If you donate the earnings to the church, you can claim them as a charitable deduction, but you still need to include the amount in your total wages.
Any self-employment income over $400 is subject to self-employment tax, and may require you to make quarterly estimated tax payments to cover the amount you may owe in taxes, in accordance with the amount reported on your Schedule C.
If a member of the clergy is provided housing or utility funds, a portion of the amount, or in some cases the full amount, may be excluded from taxable income as long as the allowance was used primarily for housing and utility payments. Social Security and Medicare taxation still applies to these amounts.
If you incur any expenses during your employment, you may lessen your tax burden by claiming a deduction for any that are unreimbursed. Depending on how you file and what the deductions are, you may claim them as miscellaneous itemized deductions on a Schedule A, itemized deductions, or a Schedule C, if you are self-employed. You'll need to have valid receipts to serve as documentation of these expenses, and it's important to keep your wages separate and know which expenses serve as self-employment and which are attainable to your employer.
Typical deductions for clergy include:
- Subscriptions to publications and trade journals in your field
- Professional association dues
- Liability insurance premiums
- Laundering and dry cleaning of vestments
- State or governmental licensing fees outside the original license
- Vehicle expenses for church business, required to be documented in a mileage log
- Supplies and incidentals
- Seminar and meeting fees
- Printing costs of pamphlets and brochures
- Business phone expenses including cell phones
- Health insurance premiums if employer sponsored coverage is not an option
Educational expenses may also be deducted provided they are a qualifying course, and don't allow you to seek work in a different field.
