Ministers and S/E Tax

[Dave T]

I know ministers can reduce their S/E tax by any unreimbursed business (ministerial) expenses.

The question I have is whether their tithe back to their church is considered a business expense? I have read Richard Hammer's book on the subject but in my mind there remains some uncertainty. Apparently if the tithe is mandatory as a condition of employment then the tax court ruled that it is an expense and not considered a charitable contribution on Sch. A and thus can be used as an offset to the S/E tax. (Assuming no reimbusement form the church)

I guess the question is if it is understood that the pastor will tithe and/or strongly encouraged but not necessarily a condition of employment then how should it be classified?

Mike M. I know you and others here do a lot more clergy returns than I do so I'm wondering what your thoughts are.

Thanks for any input.

Dave T

[chadlonetree]

I do about 80% clergy returns and have been through the issue countless times in audit.

The tithe has always been allowed as a ministry expense if there is language in the bylaws that require it. They can be in the church bylaws, district bylaws, or denominational bylaws.

When there has been no language in the bylaws, sometimes the expense has been allowed on appeal, sometimes it has not been.

I encourage all of my churches to include language in their individual church bylaws. In most cases the Pastors are already giving more than 10%, we just include that a tithe of 10% is mandatory.

[kcjenkins]

I totally agree with Chad.

[MAMalody]

I would agree with chadlonetree on his conclusion. I find in rarely in my practice that the church constitution and by-laws actually require it.