Reimbursing Church Business Expenses

(Florida)

I am working with a couple different people with churches who use the church bank credit card to pay for meals and entertainment, instead of using an accountable plan for reimbursements (which would only be 50%). I have tried to explain that only meals for travel away from home and a few other categories are a 100% tax write off.

They believe that as long as they feel its related to “church business”, then they can write it off 100% because every other church or organization they know does this.

I explain that not even in a profit business can we do that. Your explanation here is exactly why. The IRS is VERY specific and will go through meals and entertainment with a fine tooth comb. I have seen it before and court cases have proven it time and time again. How do you handle this with churches or exempt organizations using the organizations credit cards to pay for expenses without adding them to income?

Also, if a minister comes in from another church, can the host church pay for their travel expenses and not include that on a 1099 for any love offerings they also receive? I know Publication 463 is very clear on all the travel and deductible expenses, but it says for employees of the organization from what I recall. What about someone elses organization??

AND great tip on the phone receipts!! That is what I do and email it to a file!!!

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by Jimmy

(Cleveland OH)

Our church is mobile and currently without a central office.

Our pastor has to do his counseling and meetings at local coffee houses and sandwich shops.

How much of his food expense is the church allowed to cover and what steps should we take to make sure he doesn’t suffer any tax penalties?