The IRS can reclassify ministers as employees for income tax purposes if the IRS decides they should have filed their returns as employees instead of as self-employed taxpayers. Remember that employees can deduct business expenses only if they can itemize and only to the extent their business expenses exceed 2% of their adjusted gross income. If the IRS reclassifies a minister as an employee, the minister may lose business expense deductions and could owe back taxes and penalties to the IRS.

For more information, view our Ministers Tax Guide.