How do I claim allowable deductions as a minister when my minister pay is reported on both a W-2 and a Schedule C?

Follow these steps in this order to report your allowable deductions:
  1. Fill out Worksheet 1, Worksheet 2, and Worksheet 3 from Publication 517 .

  2. Using Worksheet 2, go to your minister Schedule C and adjust your business expenses by the percentage you're allowed to claim on Schedule C.

  3. View your Schedule SE as we've calculated it. If the total amount we included on Schedule SE, Line 2 doesn't include the amount you figured in Worksheet 3 correctly, you'll need to make an adjustment.

    To make an adjustment, go back to your Schedule C and click the Edit button next to Less Common Expenses on the Your Business screen. Continue until you get to the Self-Employment Tax Adjustments screen and answer Yes to the question that asks if you have other adjustments to your self-employment income. When you get to the Other Adjustments screen, enter your adjustment there.

  4. Once you're ready to file your return, you'll need to mail it so you can include Worksheet 1, Worksheet 2, and Worksheet 3 with your return.
Note: Unreimbursed business expenses incurred as a church employee are no longer deductible as an itemized deduction.

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