Can I deduct charitable contributions to my church as business expenses on Form 2106 and offset them against church income on Schedule SE to save Social Security taxes?
The new Minister Audit Technique Guide says, “No.” “Ministers often pay a small annual renewal fee to maintain their credentials, which constitutes a deductible expense. However, ministers’ contributions to the church are not deductible as business expenses. They may argue that they are expected to donate generously to the church as part of their employment. This is not sufficient to convert charitable contributions to business expenses.”
While the law lacks clarity on this issue, the IRS is clear in direction that is provided to audit personnel on this topic.
Dan Busby is a certified public accountant, president of the Evangelical Council for Financial Accountability (ECFA), and the author of the Zondervan Clergy Tax & Financial Guide.