Unreimbursed Employee Expenses

The Tax Cuts and Jobs Act of 2017 eliminated the deduction for unreimbursed employee expenses, however, for most ministers, it still pays to keep track of them.  While the law did remove this schedule A deduction for employees, there is an exception for licensed ministers.

Unreimbursed employee expenses incurred by minsters are deducted on Schedule SE rather than Schedule A. The impact of this deduction reduces the amount of self-employment tax owed by a minster.  Some examples of deductible expenses include ministry or professional dues, educational fees, travel and mileage, religious materials, subscriptions, work related meals, etc.

Of course, if you have opted out of Social Security then you don’t file a schedule SE, so these expenses cannot be deducted.

While being able to deduct these expenses does help reduce self-employment taxes, the minster employee is still better off getting reimbursed from the church for all business-related expenses. If the reimbursement is properly documented, the reimbursement is tax free.  I would much rather get a 100% reimbursement than a 15% tax deduction.