Church expense vs personal expense

by Willow

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I do the bookkeeping for our church and am unsure if we are correctly expensing certain items to the church.


For instance, the pastor and his wife will have church members to their house for dinner and will use the church debit card to purchase the food.

Or the pastor will purchase his lunch on the card while out running errands for a church function,

or the pastor will purchase himself a coffee with the church card while picking up donuts for small group Bible study time.

Where is the line for what is a legitimate church expense and what is personal choice and expense?

Comments for Church expense vs personal expense

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Nov 04, 2015
Expensing church account pastor
by: Anonymous

I think is only Fair other companies do it, why not the church.

Would you be willing to spend a whole day doing errands on behalf of the church, and not getting at list reimburst fir expenses? Food and gas?

Pastor most of the times do not get a fair salary, or benefits!

Nov 05, 2015
not the point
by: Willow

While I appreciate you giving a response, I'm not looking for what is "fair" or what "everyone else does", I'm looking for what is legal.

As the person who does the bookkeeping I feel it is my responsibility to make sure things are being handled properly. The IRS is not going to care about fair or what everyone else does.

Our Pastor is reimbursed for gas so that is not an issue.

Nov 05, 2015
Pastor salary, expenses benefits
by: Anonymous

Other way to do it is just have the pastor to keep track of all his expenses when he goes out and runs errands for the church, that way he could deduct all those expenses when he does his personal taxes as a minister.

Nov 06, 2015

by: Vickey

This is an interesting discussion. I don't think there is a black and white answer.

There is a fine line to walk between personal and business expenses when it comes to the Pastor's expenses.

I will just add a few cautions here with this topic...

You MUST set up and maintain a proper Accountable Reimbursement plan/policy to be able to legally reimburse your pastor and staff for legitimate business expenses.

I highly recommend purchasing the Church Accounting Package which includes an ebook on Accountable Reimbursement plans.

Another thing to keep in mind is that your Pastor needs to keep very strict documentation on these "close to the personal line" expenses.

Tell him to turn over the receipt on the dinner fixings and document who it was for and for what "business" church purpose it served.

On his personal lunch, you would need to detail in your Accountable Reimbursement policy exactly when and with what circumstances the church can pay for his meal.

Refer to IRS Pub 463 for the guidelines on reimbursing those types of expenses. As someone stated on this post, the same rules apply to nonprofits as for-profits when it comes to reimbursing or paying up front ...your employees' "business" expenses.

Just running around locally doing church business would not (in most cases) justify paying for a staff member's lunch. However, if they were going to be out of town all day on church business, meals could be justified.

Again ... stressing the importance of having a proper Accountable Reimbursement Plan in place!

Nov 09, 2015
Church expense vs personal expense
by: Anonymous - MN

I sure appreciate Vicky's response and the details she included. Everything that I have read from Hammer and others confirm what she has suggested.

My difficulty is that often Pastors are not inclined to provide me with the information that is suggested we need to reimburse these type of expenses. I am not sure they feel above needing to provide the details or just do not want to be bothered yet still expect their reimbursement.

I don't see a lot of reimbursement request but I have not been successful in getting a really valid process used by our Staff.

Nov 11, 2015
Taxable income can be created
by: Bill OConnell

Clergy should be reminded from time to time that when they fail to comply with the requirements of an Accountable Plan, they are creating taxable income for themselves. And they are also putting the church at risk with the IRS.

On examination of their personal tax return by the IRS, a taxpayer/clergy may be asked to demonstrate compliance with an Accountable Plan. If they fail that examination, all non-compliant payments will be deemed to be taxable income.

OUCH! Additional taxes and penalties will be assessed.

This extends to poor documentation, as well as untimely submission (more than 60 days after incurring the expense).

The church also is exposed when this takes place. The church will be deemed to have under-reported the taxable income of the individual, creating an opportunity for IRS to assess penalties for improper payroll reporting.

Bill OConnell CPA

Nov 30, 2015
Pastor and Staff Expenses
by: MarcusNTexas

Our pastor (and other staff members with credit cards) sometimes uses the church's credit card for meals with other individuals when such meals involve meetings where church "business" is being discussed or where a guest speaker or singer is being provided with a meal.

The pastor (or other staff member) always provides the treasurer with a copy of the receipt and a notation of the business purpose of the meeting / meal.

As treasurer, I receive the credit card statement at the end of each month and compare the charge with the receipt that was turned in. To date (5+years) I have not rejected any of these charges.

I agree completely with Vickey that there should be a clear policy regarding such matters and if it appears that these charges are excessive and "over the line" then the treasurer should meet with the pastor to express her / his concerns.

Dec 01, 2015
guest/visitor lunch on credit card
by: Willow

These comments have been very helpful. In regards to the meals on the church credit card for guest speakers and/or church visitors, is it just for the guest/visitor that is allowed by the IRS or can the pastor and his wife's meal be included as well? This of course means without it becoming taxable income to the pastor.

Dec 01, 2015
Pastor and Staff Expenses
by: Anonymous - MN

I handle the Staff credit cards in much the same way, ie receive the credit card statement, compare the receipts they have turned in and pay the credit card.

The receipts or the statement has a purpose of the expense and hope the IRS would be satisfied with included details.

The one expense that does concern me is Gas. How extensive do details need to be regarding the purchase of Gas to satisfy the IRS?

Dec 01, 2015
Pastor and Staff Expenses
by: MarcusNTexas

Responding to Willow's last comment......it would seem permissible for the pastor and wife to also charge their meals when paying for the meals of a guest or guests when church "business" is being discussed or when the guest / guests are involved in a church activity, such as speaking, singing or consulting; however, it needs to be understood that these should not be a regular (daily or even weekly) happenings.

It is possible to abuse such privileges. so appropriate care should be taken. It may even be the responsibility of the church treasurer / administrator to monitor these activities and have a conversation with the pastor or other staff member if it appears that the privilege is being abused. Even for volunteer treasurers ............. like me.

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