March 28, 2013

Minister Contributing to His Own Ministry

Question:

Can a minister donate to his own ministry? If so, do amounts have to be from income he earned from non-ministry sources?

Answer:

The Minister Audit Technique Guide provides directions to its agents as they examine minister's tax returns. The Guide offers some helpful insight to ministers as well:

"Dues versus Contributions
...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. The distinction is that charitable contributions are given to a qualifying organization (such as a church) for the furtherance of its charitable activities. Dues, on the other hand, are usually paid with the expectation that a financial benefit will result to the individual, as in a realtor's multi-list dues or an electrician's union dues. A minister's salary and benefits are not likely to directly depend on the donations made to the church. They may still be deducted as contributions on Schedule A [our emphasis] but may not be used as a business expense to reduce self-employment tax."

So, while a minister's donation to his employing ministry is not deductible as a business expense, it is deductible on Schedule A as a charitable contribution. This is true regardless of the source of the monies donated.

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