Clergy taxes are unique because ministers are treated as:
- Employees for income tax, but
- Self‑employed for Social Security & Medicare (SE tax)
This means clergy can deduct work‑related expenses — but only to reduce self‑employment income, not regular taxable income.
🛠️ Where Clergy Enter Expenses
Expenses always follow the income source.
- Schedule C clergy income → Enter directly on Schedule C (business expenses section).
- W-2 clergy income → Enter on Employee Business Expenses (Form 2106) screens. This includes:
- Mileage
- Travel
- Books & supplies
- Continuing education
- Parking & tolls
- Ministry-related expenses
❗ Important: Even though these are entered on the Form 2106 screens, clergy do NOT receive a Schedule A deduction. The program automatically routes them to Worksheet 3 (SE tax calculation). NOT to Schedule A.
🧭 Step-by-Step Instructions
1️⃣ Enter wages
- W-2
- Schedule C
2️⃣ Navigate to Schedule SE to Complete the Clergy Tax‑Free Income Worksheet
Federal Section → Other Taxes → Self-Employment Tax- Check the box for clergy to generate the Clergy Worksheet → Continue to the Clergy Tax-Free Income Worksheet
Enter income, parsonage, and utility expenses.
3️⃣ Complete Form 2106 (W-2 clergy income only)
Federal Section → Deductions → Itemized Deductions → Employee Business Expenses
- Answser No → 'Were you employed as an Armed Forces reservist, a qualified performing artist, a fee-basis state or local government official, or an individual with a disability claiming impairment-related work expenses?'
- Answer Yes or the Clergy Worksheets will not be generated → 'Would you like to request an exemption from self-employment tax as a minister / clergy member?'
- Enter non vehicle related clergy business expenses here —even though it says “Form 2106”. Click Continue
- Continue to Vehicle Expenses. Complete as needed
View the PDF to see the results
Worksheet 2 (prorating clergy expenses) is not supported in the program