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Church Mileage Reimbursement of Volunteers

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Question:
A church has an associate pastor who is unpaid. He drives 30 miles each direction from his home to the church, 2 to 3 times per week. It has been proposed that a “gift” from the church be made to reimburse his gasoline costs. It appears that any payment to him would be taxable. Is there any exception since he is unpaid for his services to the church, and not actually an employee? If not, can he claim his mileage at the charity rate since he is not a paid employee of the church, but involved in a charitable activity?

Answer:
Any money that the church gives the associate pastor is considered compensation because he is performing a service to the church. Employees can be reimbursed at $.555 (2012) for business miles, but not for commuting (the apparent case in this situation). If the pastor continues as a volunteer, he could claim his mileage at the $.14 per mile charitable rate (2012). Therefore, if he continues as a volunteer, the church could reimburse him up to $.14 per mile without tax consequences. Given an average of 2.5 trips per week, this equals $21 per week (truly a “token”)!

The members of my Federal Taxation I class at Maranatha Baptist Bible College in Watertown, Wisconsin have taken on the challenge of study and research to answer posted questions. Leslie Harrison of Michigan gets credit for this one.

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