Clergy Tax Deductions. What You Need to Know!
Under the most normal of circumstances, tax breaks are important to everyone. However, when you are a member of the Clergy, they can be much more significant. Unlike your everyday employee, members of the Clergy do not have Social Security and Medicare taxes withheld from their pay. Furthermore, a normal employee has their employer pay for half of their Social Security and Medicare taxes (Employee pays 7.65%, Employer pays 7.65%). When you are clergy, you must pay both the employer and the employee half (15.3%). This is known as self-employment tax.
The reason Clergy tax deductions are so important is because not only does it reduce income tax, but also the self-employment tax calculation. In short, each deduction can save a Clergy member an additional 15.3 cents on the dollar. In order to help you save on your tax return this year, I have included some of the Clergy Tax Deductions in this post. It is important to remember that these are non-reimbursed expenses.
Transportation (Local)- This can include trips for hospital visits, nursing home visits, travel to funerals, weddings (off site), and other pastoral care visits. However, this cannot include commuting between the home of the clergy and their main workplace. That is considered a non-deductible expense according to the Internal Revenue Service. From there, you may choose between taking your actual travel expenses (Gas, Insurance, Oil, Repairs, Washing and Polishing, Tires, etc), or the standard mileage rate. The standard mileage rate for your 2015 tax return is 57.5 cents per mile. No matter which option you choose, it is your responsibility to keep a mileage log that includes your starting and ending points along with your purpose for travel.
Travel (Away From Home)- There are times when a Clergy member may be required to travel away from home. This can include conferences, meetings with officials in their order, and mission trips. Expenses include hotels, plane tickets, taxi fares, parking, and rental cars. While meals are also part of this category, you must write that off in a separate category (see Meals and Entertainment below).
Membership Dues- Clergy sometimes pay a small annual renewal fee to maintain their credentials; this is a deductible expense.
Office Supplies- If you are required to buy your own supplies and are not reimbursed, you may deduct them. Office supplies can include Pens, Pencils, Markers, Highlighters, Paper clips, Tape, Rubber bands, Erasers, Stamp pads, Ink for stamp pads, Paper products, writing pads, Post–it® notes, Paper, Manila and hanging file folders, Pocket folders, File labels, Envelopes, Bubble wrap, Sealing tape, Toner cartridges, Staples, Fasteners, Glue, and 3–ring binders.
Subscriptions to Business Publications/Magazines- Clergy may also deduct the cost of job-related publications and magazines.
Clergy Clothing/Cleaning- Clergy may deduct the cost for special vestments; these qualify as uniforms for tax purposes. The cost of care and cleaning of vestments is also deductible.
Books- Clergy may also deduct the cost of job-related books.
Meals and Entertainment- If you are eating due to travel outside your local area, or are taking someone out to eat for Clergy related business, you may be able to deduct the cost. However, this deduction is reduced to an allowable 50% of the expense.
Cellphone Cost- You can write off the cost of your cell phone each month. However, you must prorate the expense for Clergy purposes only.
These are just some of the deductions that are available for clergy. Remember that these expenses can only be deducted if you are not being reimbursed from your employer. Please consult Jacobson Clergy Tax Service before you take these deductions to see if you qualify. We are always available and happy to discuss your tax situation. You can reach us by phone, (609) 375-8295, or through our website at jclergytax.com.