Tax Deductions for Self Employed Ministers
While most ministers are considered employees of their respective churches, many ministers operate as self-employed persons and are subject to special tax provisions for self-employed ministers. The IRS provides guidelines not only for when a minister should be considered self-employed, but also delineates a number of tax deductions for self-employed ministers.
Other People Are Reading
-
Health Insurance/Medical Care
-
Health-related insurance (including medical and dental coverage) for yourself and your family is tax-deductible for self-employed ministers, as are any medical expenses that exceed 7.5 percent of your gross income.
Parsonage/Housing Allowance
-
Self-employed ministers living in a church-owned parsonage can exclude the fair market rental value of the home from their income taxes. Also, any income specifically designated as "housing allowance" by the church is tax-exempt for income tax purposes (but not for self-employment tax purposes). Housing-related expenses and exemptions may not exceed the minister's total gross pay.
-
Self Employment Tax
-
All ministers who pay self-employment tax are eligible to deduct one-half of their self-employment tax liability from their income for purposes of paying income tax.
Work-Related Expenses
-
Any work-related expenses that are not reimbursed by your church are also tax deductible. These expenses might include mileage and work-related travel expenses, clothing, books or periodicals, seminars, retreats and any other expenditures directly related to fulfilling your duties as a minister.
Educational Expenses
-
As of February 2011, up to $2500 in student loan interest can be deducted each year (provided you do not earn more than $65,000 as a single or $135,000 as a couple), as can any continuing educational expenses such as classes or training seminars.
Other Deductions
-
Mortgage interest, real estate taxes, state and local taxes, charitable donations, health savings account and IRA contributions and some child care expenses are also tax deductions for self-employed ministers.
-
References
- Photo Credit priest and bible image by Lars Christensen from Fotolia.com
