Without resorting to fear mongering, I’d like to address the all too real vulnerability that many ministers have for audit potential. One of these areas of potential problems is also such a strong area of benefit to the minister’s personal well being and church growth that it behooves closer examination: That is the correct accounting and use of ministry expenses in an accountable plan.
There are the two areas that cause the most problems for pastors on their tax returns:
1. The first is Charitable contributions: because they’re typically disproportionately large in this group of people. (This is easily defended if you keep good records, and most of you do). However, here’s my real concern;
2. Ministry expenses are frequently not properly or completely accounted for. This can cause incredible hassles, not to mention, huge financial losses for the minister. Those expenses include car mileage, travel, meals and entertainment and a number of other things that are often overlooked and are too lengthy to list here. (A more complete discussion about what and how to account for it is contained in our Accountable Plan video). Wrongfully accounting for ministry expenses can cost a lot and be one of the biggest areas of contention on your tax return. It truly puts you at greater risk of audit if you do NOT have an Accountable Plan that is set up and used properly.
If done right, an Accountable Plan will almost always increase your pay while it removes a huge area of audit potential, at no additional cost to the church! We also see it reducing Social Security tax for many. Learn how to take advantage of your second greatest tax benefit.
Click “Upcoming Events” to register to view the video or find the link on our home page. Call for more information or a personal discussion: 970-667-5819.