Similar to other professions, clergy also receive a Form W-2, Wage and Tax Statement, which indicates salary received as well as housing allowances. Additional income forms, such as honoraria and fees for baptisms, funerals, marriages, and other private masses are considered self-employment. The wages are reported on Schedule C, Profit or Loss from Business. In the circumstance that you donate your earnings from these events to your organization, you still have to include the wages in your earnings, but can then deduct them as a charitable contribution.

This type of income over $400 is subject to self-employment tax, in relation to the amount reported on Schedule C. You may need to make quarterly estimated tax payments to cover the amount you owe, or the reported income on Schedule C.

Clergy who receive housing or utility allowances may be able to exclude a portion of the amount (or all of the amount in some cases) from taxable income if the allowance was generally used for housing or utility. These allowances are still subject to Social Security and Medicare taxation.

There are many expenses you may incur during your employment. You may be able to lessen the amount you owe in taxes by claiming a deduction for unreimbursed job-related expenses. Deductions can be claimed as miscellaneous itemized deductions on a Schedule A, Itemized Deductions, or a Schedule C, if you are self-employed. You should keep all your wages separate and keep receipts to document all expenses attainable to either self-employment part of your income or that from your religious organization.

You may be able to deduct:

• Trade journals and publications related to your work
• Professional association dues
• Liability insurance premiums
• Laundering and dry cleaning of vestments
• Any state or government licensing fees outside of the initial cost.
• Vehicle expenses incurred when driving for church business (A mileage log is necessary)
• Travel expenses if you are away from home for longer than a typical day’s work.
• Meals and entertainment costs directly related to employment
• Office supplies, pens, paper, etc.
• Seminar and meeting fees
• Brochure and pamphlet printing
• Long distance phone charges
• Cell phone expenses for a business phone
• Health insurance premiums, provided you are not eligible for employer sponsored coverage.

Education is another important part of your job. You may qualify to deduct expenses incurred from qualifying education courses, as long as they don’t allow you to work in a different field or take on a new occupation. You may be eligible for general education courses in these circumstances, though, so check with your financial adviser.