Getting Ready for Tax Time

Dreading tax time? Even with all the exemptions and deductions that seem to make filing taxes confusing, pastors can breeze through the process — if they take some practical steps to track and organize important records.

Keep good records

Proper files for a minister should contain these essential items: W-2 and 1099 forms, interest statements from banks or investments, dividend statements, receipts for housing items spent during the year, receipts or computer ledgers for all deductible items (church -related, medical, auto expenses and charitable contributions). If you keep good records, you'll reap these benefits:

a. Less time to finish and print tax returns. (The book ClergyTax or software programs such as TaxAct, Turbotax or Taxcut can help.) If you use a tax preparer, you'll often save money if your records are in good order.

b. You won't miss out on valuable tax benefits.

c. If you're ever audited (you probably won't be), you'll be prepared and have peace of mind.

Little known housing items

Beside rent or mortgage payments, real estate taxes and insurance, here are some great tax-deductible housing costs for ordained or licensed ministers:

  • House down payment
  • Maintenance, pest control
  • Repairs, plumbing, electrical work
  • Kitchen items
  • Cleaning supplies
  • Furnishings, including purchase, repair, and upkeep
  • Appliances: purchase, repair, and upkeep
  • Curtains, rugs, linens, decorating items, wallpaper, door locks
  • Utilities
  • Landscaping
  • Adding rooms or structural changes

Check with a tax expert, the IRS or your accountant for specifics on and how to claim these items.

Article copyright © 2003, David Epstein.
All rights reserved. International copyright secured.
Used by permission.

David Epstein is a tax attorney for nonprofits and churches. For help on preparing your taxes this year, request ClergyTax,
Epstein’s guidebook for tax preparation.