5 Things Every Pastor Should Know About Taxes (Before You File)
Tax season isn’t always straightforward. Especially for pastors. Between housing allowances, ministry reimbursements, and dual tax status (employee for income tax, self-employed for Social Security), it’s easy to overlook important steps.
Here are 5 things that could save you time, stress, and even money:
1. You Can’t Claim the Housing Allowance Retroactively
If your church didn’t designate a housing allowance in writing before you received the income, you can’t exclude it for tax purposes.
✅ You can still have it designated for the rest of the year. Just make sure it's properly documented going forward.
For a deeper dive into housing allowance check out this post.
2. You Receive a W-2, But You’re Still Self-Employed for SECA
Pastors receive a W-2 for income tax purposes but are typically considered self-employed for Social Security and Medicare under SECA.
That means you pay both the employer and employee portion of those taxes. Unless you’ve formally opted out (which is a whole different conversation).
3. You Can’t Deduct Unreimbursed Ministry Expenses (If you’re an employee)
Pastors are often told to track their mileage, meals, and supplies. But if your church doesn’t have an accountable reimbursement plan, you likely can’t deduct those expenses on your return.
✅ The best approach? Get your church to approve a plan so they can reimburse you tax-free.
4. Ministry Honorariums Are Still Taxable
If you speak at events or perform weddings or funerals, that income is taxable. Even if you don’t receive a 1099.
Set aside a portion for taxes. Pro tip: Have a separate account for this type of income so it doesn’t get mixed in with your salary.
5. Don’t Forget Retirement Contributions
Contributing to a 403(b) or IRA can reduce your taxable income and build future flexibility.
And in retirement, 403(b) distributions can still be designated as housing allowance. An added benefit most people don’t realize pastors get.
✅ Bonus Tip: If you haven’t filed your return yet, it may not be too late to make a 2024 IRA contribution. This can lower your taxable income for last year and help you make progress on retirement savings before the deadline.
Want to understand the long-term benefits of starting now? Check out this post.
Final Thought
These points aren’t tax advice. They’re just smart things to know before you hit “submit.”
Want to file with confidence? Work with a tax pro who understands clergy-specific rules and ask the right questions now. Before the deadline hits.
