Accountable versus Non-Accountable Plans

If your Church is paying for your ministry-related expenses, it is important to know if you are being paid under an Accountable plan or a Non-Accountable plan. It has a huge impact on your 1040 taxes. Under an Accountable plan, you are reimbursed for expenses. If you go out and buy a $10 book, you…

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8 questions about employee expense reimbursements

The compliance risks of mishandling employee expense reimbursements have spiked in recent years. And the IRS is in the middle of a wide-ranging audit crackdown on employment-tax issues. Have you reviewed your expense reimbursement policy recently to determine if it adheres to the Internal Revenue Service (IRS) guidelines? Now is a great time to review your policy…

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Can we pay for gym membership for church staff?

You can, but it would need to be considered as extra taxable income. Gym membership dues are considered a personal expense. There is no tax law that excludes employee or employer paid third-party membership dues from taxable income. The only time the value of membership dues are excludable from income is if the employer provides…

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How Should I Get Reimbursed?

While working for a Church, you may have to pay some expenses out of your own pocket. This could be things like paying for gas while you drive to a distant location, or paying for office supplies, or paying for laundering ceremonial garments. Regardless of the expense, when you get reimbursed by your Church, you…

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IRS Releases 2019 Standard Mileage Rates

The Internal Revenue Service (IRS) released the 2019 standard mileage rates. Beginning January 1, 2019, the standard mileage rates for the use of a car (vans, pickups or panel trucks) will be: 58 cents per mile for ministry or business miles driven, up from 54.5 cents for 2018 20 cents per mile driven for medical, up from…

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Guide to Minister’s Compensation

You may find it helpful to begin by considering the goals of a compensation package. A church should provide its staff with adequate income so that they can fulfill their roles without undue concern about current and future financial needs. Freedom from financial anxiety lets the minister focus on his or her service. It also helps your church…

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Flat-dollar Reimbursements Taxable

Question: Employees often use their personal cell phones for church business. The church requires that they submit monthly expense reports and they’re reimbursed through an accountable plan. The church board wants to ditch the paperwork and just pay flat-dollar allowances to employees every month. Would that be taxable? Answer:  Yes, the allowances would be taxable because…

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How To Create A Cell Phone Reimbursement Policy

Creating a policy for employee mobile phone reimbursement can be tricky. Unlike the rules surrounding other ministry expenses, IRS regulations governing employee cell phone use are ambiguous and in a state of flux. To date, no single model of cell phone reimbursement has become an industry norm. Churches need to carefully consider the model through…

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Commuting vs. Ministry Miles

Commute miles are from your home to your first ministry location and from your last ministry location to your home. Multiple trips you make throughout the day to your home are also considered commuting. Returning to the church from home for an evening meeting (such as a board meeting) would be considered commuting. Driving to…

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New Changes to the Employee Business Expense Deduction

Prior to the Tax Cuts and Jobs Act, which went into effect, January 1, 2018, unreimbursed ministry-related expenses were generally deductible on the minister’s individual tax return as a miscellaneous itemized deduction (Schedule A) if they exceeded 2% of an individual’s AGI. Starting in 2018, these deductions will be eliminated for tax years through 2025. This includes unreimbursed…

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