Tax Write-Offs for the Clergy
- Members of the clergy often raise families and own homes in the communities where they serve. Taxpayers that own homes are eligible for two significant tax deductions: a deduction for property taxes paid and a deduction on home mortgage interest. Both real estate taxes and interest payments can amount to thousands of dollars a year, which can result in large tax savings.
- The IRS says that the services performed by clergy like pastors and priests are generally subject to self-employment tax. The self-employment tax amounts to 13.3 percent of income in 2011 and includes money that goes to Social Security and Medicare. Taxpayers that are subject to self-employment taxes can deduct half of the self-employment tax they pay when figuring their adjusted gross income.
- Religious institutions often receive a large portion of their income from the donations of congregants. Amounts that religious organizations receive as donations are tax-deductible as charitable contributions on the tax returns of the givers. In addition, clergy members might give a portion of their income to various charitable organizations and causes. Gifts of both cash and property to charitable organizations qualify as tax write-offs.
- The IRS lets taxpayers deduct a variety of work-related expenses on tax returns. Examples of common business- and work-related deductions include the cost of running home office, the cost of using a car for business purposes and the cost of licenses and legal fees related to a job.
- Home tax deductions, charitable giving and work-related expenses are considered itemized tax deductions. When fling a tax return, the filer can choose to use the total of all itemized deductions or a standard deduction but not both. The standard deduction is $5,800 for single filers and $11,600 for joint filers for 2011 tax returns.