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Professional Expenses and Fair Compensation
The Principles of Fair Compensation call congregations to provide a professional expense allowance for all religious professionals.
U.S. tax law provides that congregations and other organizations that employ ordained ministers or other religious professionals may consider the items below as usual business expenses. Such expenses are not included in the compensation paid to individuals; they are part of the necessary expenses of the organization and are not reported for income tax purposes.
Professional expenses include:
- Automobile expenses while on official business (such as to meetings, hospital or home visits, trips for educational purposes or to purchase supplies, travel with a youth group or a church school class, etc.) are reimbursable at the standard mileage rate in effect at the time. The costs of commuting to and from home to work are not allowable as business automobile expenses.
- Travel expenses while away from home overnight for work or business, including air fare, taxis, rental automobiles, lodging, meals, and incidentals are all professional expenses. This includes costs to attend professional conferences.
- Entertainment expenses directly related to the mission or programs of the organization are considered professional expenses. These may include entertainment at home or in restaurants of members or potential members of the congregation.
- Books and journals acquired and used for professional purposes may be treated as business expenses.
- Computers and related equipment costs may be treated as a business expense through a Section 179 deduction if the items are used 50% or more for professional activities. It is customary today to consider computers and peripherals as essential for the performance of one's duties.
- Educational expenses such as tuition, books, and supplies are professional expenses if related to one's professional status or responsibilities, or to maintain skills needed in one's work. Travel solely for entertainment cannot be treated as a professional expense. Travel in connection with educational activities, conferences, or worship services will usually be legitimate. Some Jewish and Christian groups have considered travel to the Holy Land as inherently inspirational and valid as serving a religious purpose, but this practice has come under IRS scrutiny. Where the purpose of travel is both personal and business, the expense may be pro-rated as partly a business expense and partly a personal one.
- Dues for membership in professional organizations are legitimate expenses.
- Telephone expenses, except for the basic charge for a home phone, may be counted as business expense if related to the performance of one's duties.
- Religious garments or robes may be purchased and cleaned with funds for professional expenses, but this does not apply to garments worn as ordinary clothing.
- Insurance premiums premiums for malpractice insurance or coverage of business equipment may be legitimate expenses.
- Office supplies such as stationery, letterhead, etc. are legitimate business expenses.
Professional expenses will vary greatly from ministry to ministry depending upon age, career stage, and professional interests.
Leadership Level: Professional Expenses will be provided for all Religious Professionals. They should be set at the greater of 10% of salary (and housing for ministers) or $5,000, pro-rated for part-time religious professionals. Additionally, congregations should provide sufficient funding to ensure professional development for administrative staff.