Is a Pastor's book allowance taxable?

by Daniel
(North Carolina)

Hello. I am a pastor of a church in North Carolina. In our budget is a line item for Pastor's Resource (I buy books, journals, etc.) with this.

It's not an allowance per se, but rather a budget item from which I purchase materials to aid with pastoring, sermon preparation, etc.

It is traditional for a pastor to take these books with him when he leaves a church. Therefore, is the money I spend for books considered a taxable benefit?

Thanks in advance!

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Comments for Is a Pastor's book allowance taxable?

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It Depends
by: An Executive Pastor

If you are purchasing books for sermons and the church reimburses you for that purchase under an accountable reimbursement plan, it should not be considered taxable.

If the church buys the book outright (no accountable reimbursement plan), then you may have more to address.

There is a possibility that the IRS could intervene if the purchase of books were excessive (that would be a LOT of books).

For accounting purposes, most items have a depreciation window, including books. The longest most accountants will set for an item is usually 7 years.

From what I have read, if/when you leave a church, the only possible tax issue would be for those books purchased during a seven year period, with each passing year diminishing the value of the book(s).

My recommendation - setup an accountable reimbursement plan through the church. You buy the books, submit a receipt and they reimburse you, within the determined parameters.

For more details, see Church Law and Tax Today. http://www.churchlawandtax.com

Additional Question on Books
by: Anonymous

I understand the church can purchase books for pastors to help with sermons and such. It is my understanding that if the church gifts the books to the pastor when he leaves, then the value is added to his W-2. I was told by a CPA that the books needed to be used for sermons and not just bought to build up the pastor's library.

My question is, is there a limit to the amount spent on books, periodicals, etc.? Is there a point when it becomes excessive and becomes a possible problem for the church with the IRS?

Pastor's Book Allowance
by: Anonymous

In the last few years the IRS adjusted the tax laws regarding clergy books. I believe these rules would apply whether books are paid for directly by the church or whether the church provides an expense account. When a minister leaves a church he is required to leave all books that were paid for by the church.
One respondent suggested that the church could gift the books when the pastor when leaves the church. I am uncertain of this, however, if this is acceptable the minister would still have to claim as income the fair purchase value of used books in similar condition.
We have been in the ministry for 30+ years and my husband has opted to pay for his books himself so there is no doubt as to who has legal claim to them.

Advice
by: Anonymous

I am not a tax professional, but have been working with one to get our church's books in compliance. Our pastor had a ministry fund that he purchased books and other aids for ministry help from. The accountant I spoke with said we should do away with the ministry fund, and use general funds to purchase "pastor's ministry helps." The church can give them to him as a gift if he leaves.

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