Housing Deductions

• If you receive a housing allowance as part of your earning as a minister, you can deduct this from the part of your salary that is subject to income tax, as long as the money is designated as a housing allowance before it is paid. If the church provides you with free housing as part of your job, you are allowed to deduct the fair rental value of the property, and your reasonable utility and repair costs, from your income tax. The amount you deduct must not be excessive, and should reflect the typical cost of housing in your area. If you own your own home, you can deduct the mortgage interest payments and the property taxes from your income taxes.
  
  

Housing Deduction Limitations

• If you receive a housing allowance from your ministry, you cannot deduct the full amount of the allowance if you are also earning self-employment income. I you are paid a salary from your ministry and earn additional income from performing weddings, baptisms and other services, you must determine what portion of your total income is subject to self-employment tax and deduct this from your allowable deduction. For example, if 20 percent of your income is subject to self-employment tax, and 80 percent is salary, then you can only deduct 80 percent of your housing allowance from your income tax.
  
  

Business Expenses

• You may deduct certain expenses related to your work as a minister, such as travel, office expenses, books and clothing. Expenses related to your salary income should be reported on Schedule A of Internal Revenue Service Form 1040. As with your housing allowance, you can only deduct the portion of your expenses related to your salary, not to your self-employment income. For example, if your salary accounts for 80 percent of your income, you can only deduct 80 percent of your allowable expenses. You may also deduct expenses related to your self-employment income. These deductions should be reported on Schedule C.
  
  

Additional Deductions

• As a minister, you can deduct the cost of any health insurance you paid for yourself and your family, as well as the cost of long-term insurance, such as disability insurance. You can also deduct half of your self-employment tax, but not your income tax, as an adjustment to your income. If you are opposed to public insurance on purely religious grounds, you may request an exemption from paying Social Security tax on your income. To do this, you need to fill out IRS Form 4361. In most cases, this exemption is irrevocable.