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Federal Tax Tips for Ministerial Procrastinators

Check your records twice this year to take full advantage of these helpful deductions.

Have you been too busy this year to file your ministerial income tax return? Or are you just a true income tax procrastinator? Well, this year it might have paid you to wait. Otherwise you would have missed some of the following last-minute overlooked deductions.

Check your records twice this year to take full advantage of these helpful deductions.

Overlooked housing allowance expenses

Housing allowance expenses can be almost anything that makes a house a home. These do exclude such items as a home loan for a new bass boat or a refinanced mortgage with a cash-out option. Many commonly overlooked housing allowance expenses include internet services, satellite TV or cable, new kitchen appliances, remodeling costs, chairs, tables, exercise equipment, lawn care, a new roof, mortgage closing costs, and other home expenses such as supplies and tools.

Housing allowance you may claim on your minister's income tax return is limited to the lesser of the following: (1) fair market rental value of the home (including furnishings and utilities.); (2) the housing allowance amount the church officially designates; or (3) the actual amount of expenses the minister uses to provide a home.

Missed contribution credits

While most ministers remember to claim the contribution credit statement sent by the church, donors often overlook other common donations such as noncash gifts. It's easy to forget VBS supplies, clothing donated to qualified charities, back to school gifts for underprivileged children, tax-deductible contributions to fundraisers, and other donations. Also, your trips to and from your church can earn you an extra 14 cents per mile donation.

Church-sponsored mission-trips expenses

If your church sponsors a mission trip, donors may claim contributions personal tax returns if the church handled the money and the minister furnished the church receipts for the mission trip. This often overlooked deduction is a tremendous way of reducing income tax liabilities.

Wedding and funeral expenses

Ministerial income from weddings and funerals is considered taxable income on a ministerial income tax return. But expenses related to these services are deducted from this income on Schedule C (Self-Employment form). Expenses could include wedding gifts, mileage to and from the funeral home or wedding reception, and hotel rooms for out-of-town events. The best part of this deduction is that these expenses will also reduce the amount of Social Security Self-Employment taxes you owe.

Incredible double deductions for certain ministerial housing expenses

A minster may claim as part of his housing allowance expenses related to mortgage payments, including property taxes, interest paid, and many of the closing costs associated with refinancing a mortgage or taking out a new loan. However, the deductions do not stop there. The minster may also claim many of these same expenses as itemized deductions on Schedule A of his income tax return. Itemized deductions can include the same property taxes, interest, and many of the same mortgage closing costs. Pretty neat!

Okay, Rev. Procrastinator, the IRS has given you an extra day to file your income taxes this year. Your income tax return is not due until April 17 so do not delay any longer because the deadline is midnight that evening without any exceptions! To help you meet that deadline, work a little less on your fishing illustrations and a little more on Uncle Sam's obligations.

Keith Hamilton, D.Ed.Min, CFP, CRPC is with the Georgia Baptist Convention. He has written several publications on establishing church designated funds, managing your household finances, and protecting your church and ministry from identity theft.
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