October 08, 2009

Education Costs to Become a Minister

Question:

What advice can you give a newly ordained minister on the deductibility of expenses related to training materials, tuition, books and apartment rent incurred during the process of becoming a licensed minister?

Answer:

IRS Publication 529 communicates information regarding the deductibility of "Work-Related Education." These deductions are Miscellaneous Itemized Deductions on Schedule A. It says,

"You can deduct expenses you have for education, even if the education may lead to a degree, if the education meets at least one of the following two tests.
  • It maintains or improves skills required in your present work.
  • It is required by your employer or the law to keep your salary, status, or job, and the requirement serves a business purpose of your employer.
"You cannot deduct expenses you have for education, even though one or both of the preceding tests are met, if the education:
  • Is needed to meet the minimum educational requirements to qualify you in your trade or business, or
  • Is part of a program of study that will lead to qualifying you in a new trade or business."
Typically, ministers are not able to qualify their deductions for the bachelor's or master's degree that is expected for them to receive a call into the gospel ministry. However, ministers taking courses to fulfill one of the first two tests listed above may qualify. Publication 529 indicates which expenses qualify. Apartment rent is not deductible.

Of course, there are other tax benefits (education credits claimed on Form 8863) that aspiring ministers can enjoy.

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