Gas Allowance

by Jan
(Texas)

Our church has a charge account at one of the local gas stations. Pastor and staff is able to charge gas and the church is billed monthly for the gas purchases. Is this an allowable expense?

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Feb 22, 2011
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pastor's gas allowance
by: Anonymous

My husband is a pastor, and our church has this type of gas allowance for him. We charge the gas at the convenience store which bills the church.
We received our W-2 from the church and this amount is not included. Is it possible to claim this amount somewhere else, such as line 21 of form 1040?

Dec 31, 2010
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Gas Allowance
by: Jan (Texas)

Thanks, Donna. From the time since I posted the question, I attended a church tax compliance conference and found out that gas is not an allowable expense. The correct way is to reimburse mileage through the accountable reimbursement plan.

Dec 30, 2010
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gas/mileage payment
by: Donna

From what I have read, a gas allowance is fully taxable to him/her as income. They may deduct, as a miscellaneous itemized deduction, their vehicle expenses or mileage. However, those deductions can only be taken for the amount that exceeds 2% of the adjusted gross income. Additionally, if he/she does not itemize they lose the whole deduction, but still has income. This is referred to as a non-accountable plan.

Under an accountable plan, they would submit mileage logs and expense reports to the church,
who would reimburse them at the current IRS rate for mileage. This is an accountable plan and
the payments to them are not taxable, and the mileage/expenses are not deductible by the pastor.

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Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)

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