AboutRichard Fritzler Expertise I am in the business of tax planning for business owners. Our company helps business owners structure so that they can be reduce the taxes that they owe, making them far more profitable.
Experience Since 1986 I have been helping successful business owners reduce taxes, protect assets, and limit their liability. The company is Owelesstax, incorporated at www.owelesstax.com
Organizations National Small Business Owners Association.
Nevada Association of Listed Resident Agents.
Citizens Legal Association
The Business Owners Institute
Publications Contributing author to "The Corporate Standard Newsletter".
I am also a writer for an email newsletter about business
Googlegroups/Successfulbusiness
I am also an Expert in the areas of Tax Law, Retirement Planning, and Estate tax issues.
Expert: Richard Fritzler Date: 2/15/2008 Subject: Clergy Deductable Expenses
Question I am an ordained but unpaid clergy member of a 501(c)(3) church. While I do not receive clergy income, I do travel out of town occasionally to perform my duties. I also purchase various books, supplies, etc. to further my cleric studies. I do not itemize my deductions. Can I deduct these expenses anywhere on my federal income tax?
Thank you!
Answer prescript: as I reread this answer it seemed less friendly than I intended. Please believe that I do not intend that.
You have listed a number of things that the church as a "business" could possibly deduct, however, since you are unpaid as a clergy you have no "business" income to deduct against.
The IRS is very aggressive on pursuing people that go into business simply to take deductions. The 1-in-3 rule and 2-in-5 rule are examples.
You could, but shouldn't (that means, you will ultimately hate the results) file a schedule C on your personal tax return and claim those items mentioned. You then could reduce the amount of tax that you pay against your other income.
The short term result would be a lower tax today, and sadly, most tax preparers who fancy themselves as tax advisors or advocates would consider that a win.
The long term result would be the IRS reclassifying your "business" as a "hobby" and disallow these deductions at some point in the future, charge back taxes, penalties and interest on every year.
Even if you spent $500 on books and supplies in the year, your tax savings would only be the income tax rate, which could be 15%, so the real savings is $75 if you took the time and effort to try and deduct these.
The potential back taxes and penalties would be possibly 3 times that amount.
Richard Fritzler
www.owelesstax.com
www.nevadacorporateservices.com
phone 800 590-6612
