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                 Minister Expense Form

The 2018 Tax Laws may affect most of our pastors.  The Standard Deduction for 2018 will double to $24,000, which will affect most pastors on them deducting certain items (mileage, dues, ministry expenses, etc) from their Schedule A.  Unreimbursed Business Expenses are gone starting in 2018!  This Standard Deduction was raised in hopes to make our tax system simpler, more convenient, and to eliminate the hassle of filing a long form. 

 

Very Important---Pastors can set up a ministry expense through their church in which they can have these expenses reimbursed back tax-free, just as they do for housing.  If done properly, expenses are not subject to Self Employment.   A pastor will need to do the following:

 

  1.  Estimate your expenses from previous tax years (2017 and prior) on your mileage, due, ministry materials and other expenses.
  2. Deduct this amount from your base salary.
  3. Create a Ministry Expense Account from your church so that you can submit reimbursement from these funds.  It is best to under estimate as you cannot go beyond the set amount you have chosen.
  4. Have this Ministry Expense Account discussed and voted on with your board and is in your board minutes.
  5. Each week, submit your expense report for reimbursement.  Please look at the example below:

            MINISTRY EXPENSE ACCOUNT

Pastor______________                                               Date:_____________

     Type of Expense

            Explanation

Reimbursed Amount

 

 

 

Mileage

Ending Mileage          79,233

 

          Dates from:    

Beginning Mileage      78,233

 

          1/1/17 to 2/1/18

Mileage:         1,000@$ .545

           $545.00

 

 

 

Dues

2018  Yearly Ministry Dues

           $240.00

Misc. Ministry Expenses

CD and Book—(Name Them)

           $  55.00

     

 

 

Total Reimbursement

 

           $840.00

 

Signature of Pastor:________________  Signature of Treasurer:_____________

 

 

 

 

Example:

Salary:                     $2,000 a month                      Suggested Salary*    $1,500
Expenses Now:           00                                  Reimbursed Limit**   $   500
Total Salary:         $2,000 a month                     Total Salary               $2,000

 

*This limit is only an illustration. If you use a $500 limit for your Ministry Expense Account, based on the previous Figure 1 Illustration figures, you would lose $340.00 that cannot be reimbursed by the church (since there is not enough money to reimburse).  This is why you must be as accurate as possible. 


**You need to take a look at your usual business expenses that you incur.  Since these expenses are no longer available on Schedule A.  You may also visit with your tax person to get an idea on your 2018 expense limit or review your expenses from past returns.  Expenses and mileage from each pastor will vary.  Again, the illustrations are for you to understand how this works. 


NOTE: If you do not choose to have your business expenses to be reimbursed as we have mentioned above, you choose to use your Standard Deduction of $24,000 for 2018.

 

Restructuring your salary/expenses can be a tremendous benefit for you because you can claim your Standard Deduction of $24,000 plus have your expenses channeled through the church as a benefit to reimburse you for your expenses.  Again, please deduct the same yearly limit you wish to choose from your salary.  Your salary will decrease but you will net more by doing it this way.


Again, this does not affect your 2017 tax return, just expenses from this year forward.

 

Disclaimer: Please check with your tax consultant.  Pastoral Care, Inc. is not a tax consultant.  It is merely sharing information given by us from another tax consultant to advise you of these possibilities.  Pastoral Care, Inc. does not intend to represent itself as a tax authority and strongly suggest you contact your tax person.  

 

Download Minister Expense Form
Minister Expense Form.docx
Microsoft Word document [11.3 KB]

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