A clear, written expense policy is one of the most important documents your church can have. Watch the overview, then explore the articles and tools below.
General guidance. Not personal tax or legal advice.
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Download a printable PDF version with all the same links and resources.
A documented expense policy is not just paperwork. It protects your staff, your tax position, and your trust with the congregation.
01
Without a written accountable plan, the IRS treats reimbursements as taxable income to your staff. A policy protects every dollar you give back to employees.
02
Churches are not exempt from IRS scrutiny. Documentation that shows clear rules, receipts, and approvals defends every expense your ministry makes.
03
Staff and volunteers should never have to guess what is reimbursable. A clear policy removes awkward conversations and keeps everyone on the same page.
Practical reads from the ChurchBiz blog on expense policies, accountable plans, and reimbursements. Everything below is published free.
Article
The full breakdown of what an expense policy should include, how to balance accountability with practicality, and a sample policy you can adapt. Includes an interactive checklist.
Read MoreArticle
A practical look at three tools and approaches churches use to manage expense reporting, from simple receipts to software-based workflows that reduce administrative burden.
Read MoreWhen your team is ready for full training, Finance Team 101 covers expense policy setup as part of the broader curriculum on church finance.
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The complete church finance training for treasurers, board members, and finance leaders. Eight CPA-taught modules including expense policy frameworks, accountable plans, and internal controls.
Expense Policy Coverage
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The expense policy questions we hear most often from churches.
An accountable plan is an IRS-recognized framework for reimbursing employee business expenses without those reimbursements becoming taxable wages. Three rules apply. The expense must have a business connection to the ministry. The employee must adequately substantiate the expense (typically a receipt and business purpose) within a reasonable time. And the employee must return any excess advance promptly.
If your church does not have a documented accountable plan, every reimbursement is technically a non-accountable plan payment, which means it should be added to the employee's W-2 as taxable wages. A simple written policy fixes this.
At minimum, your policy should cover what types of expenses are reimbursable, what documentation is required (receipts, business purpose, approver), spending limits or category-specific guidelines, the approval workflow, the timeline for submitting expenses and returning unused advances, and consequences for noncompliance. It should also address credit card use, mileage reimbursement, meal limits, and any per diem rates.
Read our full guide: Does Your Church Have a Clear Expense Policy? includes a sample policy and an interactive checklist.
The IRS requires receipts for any single expense over $75 and for all lodging expenses regardless of amount. However, best practice for churches is to require a receipt for every reimbursable expense. The administrative cost of a no-receipt policy is small, and it dramatically simplifies your audit defense. The only common exception is mileage, which uses a logged distance instead of a receipt.
Yes, but it has to be set up correctly. A discretionary fund administered by the church (with the pastor recommending uses but the church approving and disbursing) can be appropriate for benevolence and ministry expenses. A discretionary fund handed to the pastor as a lump sum without ongoing accountability becomes taxable income and can create both employment tax and donor deductibility issues.
Review your expense policy every year as part of your budget process. The IRS standard mileage rate changes annually, per diem rates shift, and your ministry's needs evolve. Document the review in your board minutes, even if no changes are made. This shows ongoing diligence if your records are ever examined.
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Our CPAs work with hundreds of ministries on expense policies, accountable plans, and reimbursement workflows every year. We can help you build one that fits your church and stands up to scrutiny.