Can clergy deduct trips when they have to participate or attend ceremonies? Say they are asked to say a prayer or read scripture.

[tim-timthetoolma]

I am newly ordained and not sure what all the rules are. I took a trip  to DC as I was asked to participate in a Christmas concert reading scripture. This was as a volunteer but I could see taking similar trips and officiating at ceremonies such as a wedding and getting remunerated.

[DianeW · Accepted solution]

Yes, if you travel to a different location to perform services the expense of those trips are deductible against either self employment income or as job related expenses as a common law employee of a church.  All income received for these services is considered self employment income.

You can use these links to become more familiar with clergy income and expenses.

1. Minister's Compensation & Housing Allowance
2. Clergy Housing Allowance Worksheet
   
3. IRS Topic 417-Earnings For Clergy
   

[eymcl8170]

How about when the pastor attending the wedding reception only as a guest but didn't have to perform any services, can he claim  mileage reimbursement from his church?

How about if he said a prayer at the wedding reception, can he claim the mileage then? 

[Critter-3]

It has to be official business to deduct a business expense. 

[Opus 17]

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@eymcl8170 wrote:

How about when the pastor attending the wedding reception only as a guest but didn't have to perform any services, can he claim  mileage reimbursement from his church?

How about if he said a prayer at the wedding reception, can he claim the mileage then? 

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This is an old discussion, the 2019 date is incorrect.  A number of things have changed that you need to be aware of.

1. Deductible job-related expenses are those expenses that are ordinary and necessary to there performance of work for money.  If you aren't getting paid, it's not a job-related expense, even though the task may be similar to your job.  

2. Most clergy should be W-2 employees, and job-related expenses for W-2 employees are disallowed for tax years 2018-2025 (using form 2106).  While clergy are considered self-employed for limited tax purposes, they are almost always common law employees and should receive a W-2.

3. Clergy job related expenses can also be deducted as an adjustment to self-employment income, even though they are not deductible from taxable wages subject to income tax.  This requires special adjustments to schedule SE, taking the Deason rule into account, and possibly attaching a written statement to your tax return.   But the job-related expenses must still be ordinary and necessary to the performance of work for money, and not simply be volunteer or friendly services that are similar to your job.

[KSherwood]

Just to revisit this. If a pastor is traveling out of state for one of their parishioner's weddings and the couple wants to pay for the pastor's hotel, airfare, food and car rental, does anything need to go through the church or can the couple just pay for it all?

[Opus 17]

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@KSherwood wrote:

Just to revisit this. If a pastor is traveling out of state for one of their parishioner's weddings and the couple wants to pay for the pastor's hotel, airfare, food and car rental, does anything need to go through the church or can the couple just pay for it all?

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Most of the time, the pastor will be doing this as a "side gig" and the income and expenses will be reported on schedule C.  

Generally speaking, the pastor is a common law employee of the church if the church has control over employment conditions (hours of service, when the pastor is allowed to take vacation, and so on).   It's possible that the church might have an employment contract with the pastor specifying that the pastor may not do outside work without the approval of the church and all outside work must be paid through the church.  I personally would never agree to such a contract.  

Assuming a normal business relationship, then the church controls the pastor's conditions of employment at the church, but the pastor is allowed to take side jobs.  Weddings and funerals are almost always considered side jobs, even if held at the church between church members.  The wedding couple might pay a professional fee to the pastor and a fee to use the church building, but the fee paid to the pastor is, from the pastor's point of view, self-employment income to be reported on schedule C, and not part of his pastoral wages from the church. 

For an out of state trip, the pastor would report all the money they received as gross business income on schedule C as they would for any other kind of self-employed side job.  That includes the fair market value of anything paid for by the couple--if the couple pays for the pastor's hotel, that's still considered part of the pastor's gross compensation.  Then the pastor lists deductible business expenses, which includes travel, meals, and lodging, according to the usual rules for such business expenses, and pays income tax and SE tax on the net income.  (If the pastor charges a $250 professional fee and has $1000 of expenses, and the couple pays $1250, the pastor has $250 of net taxable income.  That the same outcome as if the pastor reported $250 of professional income and ignored both the expenses and the reimbursement, but the IRS wants to see the gross figures and the math.)