They report their church salary on line 7 of Form 1040 and receive a Form W-2 from the church. Introduction Complete the first several questions on Schedule C. Ministers should list the code 813000 on line B, since this is the code that refers to ministers and chaplains. This is not so. This code applies to the incidental self-employment activities of ministers who report their church salaries as employees. It also applies to those few ministers who are self-employed, such as traveling evangelists.
Many ministers continue to report their income taxes as self-employed.
This advantage is illusory. Most ministers, if audited by the IRS, would be reclassified as employees and their Schedule C deductions disallowed. The best way for all ministers to handle their business expenses is through an accountable expense reimbursement arrangement. Report any business expenses associated with your self-employment earnings on lines 8 through 27. Further, self-employed people who use Schedule C to report their business deductions are not subject to the two percent floor that applies to the deduction of employee business and professional expenses that are either unreimbursed, or reimbursed under a nonaccountable reimbursement plan.