A church is treated like any other employer as far as the tax rules regarding business related employee expenses.
CTK reimburses expenses on an accountable plan that’s acceptable by the IRS and we follow the 3 requirements needed to satisfy the plan. Reg. §1.62-2(c)(3)
1. The expense must involve a business connection.
2. The employee must substantiate the expenses by receipts with sufficient information to identify the specific business nature of the expense within a reasonable amount of time. It is not sufficient for an employee to aggregate expenses into a broad category such as travel, supplies, or the use of non-descriptive terms such as miscellaneous business expenses.
3. Employees return any unused funds back to CTK.
If the 3 requirements aren’t being satisfied the IRS requires that we add the expenses to the employees W-2 at year-end as taxable wages.