Vacation Expenses Paid by Church

Scenario: Pastor Brown is going to take a week of vacation to Florida. He wants one of the youth pastors who work part-time to accompany he and his family. The church paid for the airfare and the hotel rooms for both pastors.

Question: Are the travel costs paid by the church, taxable compensation to the minister?

Answer: YES. Under IRS Publication 463, if a trip is “personal” in nature, the travel costs represent a personal expense and not a business expense. Because the church paid for these personal costs, the travel costs for both pastors are included as taxable compensation in Pastor Brown’s W-2 at the end of the year.

Why Pastor Brown's W-2 and not the youth pastor? It was Pastor Brown's decision and authorization for the church to pay for the youth pastor's airfare. It was Pastor Brown's request that the youth pastor accompany his family. Even if a business purpose could be performed during the vacation, the trip was primarily personal in nature, therefore justifying these expenses as taxable compensation to Pastor Brown.

Do you have any questions about other types of personal expenses that may be taxable? Post a comment.