No Funds for Pastor's Expense Reimbursements

How to write a statement or resolution when church has no funds to reimburse Pastor's expenses? I search you site and found nothing addressing the issue. I await your response. Thank you!

Comments for No Funds for Pastor's Expense Reimbursements

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Aug 12, 2014
Include Wording in AR plan to Cover Organization and Employee
by: Vickey

You should include wording in your accountable reimbursement arrangement that would allow your minister/staff to claim unreimbursed expenses on their personal taxes IF the church could not afford to reimburse those expenses.

I read an article on StartChurch many years ago on this very issue. See more details on that article on my AR Tips page.

In a nutshell, a taxpayer is not entitled to take a tax deduction for unreimbursed businesses expenses if the employer has a reimbursement policy.

So your accountable reimbursement policies should include wording that would require the church to send a written reply to the requesting employee recognizing their claim as legitimate but also denying it according to its reimbursement policy on the basis that it cannot afford to issue the reimbursement.

I too very much appreciate all of Sandi's contributions to this site! I thank God for you:)

Apr 04, 2013
new church
by: Sandi

Congradulations and prayers for your new church!!
This site is a blessing! (Thanking God so much for Vicki!)
I suggest you order hard copies of IRS pubs:
1828- Tax Guide for Churches and Religious Organizations
the 15 series
Publ 525 - Taxable and Nontaxable Income
Publ 517 - Social Security and Other Information for Members of the Clergy and Religious Workers
Publ 463 - Travel, Entertainment, Gift, and Car Expenses
Pub 4221-PC - Compliance Guide for 501(c)(3) Public Charities
Publ 598 - Tax on Unrelated Business Income of Exempt Organizations
Publ 526 - Charitable Contributions
These are avail. online but it is good to have for the council and church members to be able to see where you are getting the info from :-)
I also suggest you give your pastor this site as Vicki has ton's of info for pastors too!
Make sure you get policies in place for everything you do as IRS requires churches to follow the 501 rules even if they don't get the "official" exempt certificate (Vicki also has tons on policies)
May God bless your new outreach!

Apr 04, 2013
No No Funds for Pastor's Expense Reimbusement (s)
by: Anonymous

Thank you Sandi. I will read IRS' resources. Our church is just starting. I am trusting that any other questions our church may have on this subject will be answered after reading the IRS' pubs.

This site has been a blessing to us, from Therese, all of you. And Sandi, I receive the encourgement of prayer you have so graciously offered. I wish you well!

Apr 02, 2013
not reimbursed
by: Sandi

Please look at IRS Pub 463

IF: you have an accountable plan but the employee does not take advantage of it with you
THEN: they can not claim it on their own.

IF: the church does not reimburse them because there are no funds
THEN: they can claim it on their own (they have all the documentation, not the church, as the church did not, can not, or will not reimburse them)

IF: the church uses an non-acountable plan
THAN: all payments are income (box 1 W-2)

There are many rules on what is allowed. IRS Publication 15 (Circular E) is a good start and covers what employers are responsible for.

I have not found anything stating the employer has to give a statement to the employee, except what plan they are using
" Your employer should tell you what method of reimbursement is used and what records you must provide"

SO:... you might want to document in the minutes that "no funds are available for reimbursements at this time" and they could keep a copy of that in their file...

Hope this helps

Apr 01, 2013
Pastor's Expense
by: Anonymous

What is the church has an Reimbursement Account (RA). Just recently, I came across information. This year (2012), the IRS disallowed the expenses because a church had an RA in place, but I cannot find the article discussing this topic. Could someone help with the statement/resolution? What should the church include so that the pastor can then get his expenses allowed when he files? (not through the church). I would appreciate any and all assistance.

Mar 27, 2013
by: Sandi

Reimbursements are a benefit and do not have to be given.
Pastors are usually dual status (employee of church and also self employed) so anything the church does not reimburse they would be able to claim on their own tax forms.
I have not heard of the church needing to give any statements to that effect, the pastor would have the receipts and any other supporting documents for his own claims.

Hope this helps,

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