FBMI uses an Accountable Reimbursement Plan to allow missionaries to avoid paying extra taxes on ministry expenses. Here is some information from the IRS about this type of plan:
To be an accountable plan, your employer’s reimbursement or allowance arrangement must include all of the following rules.
- Your expenses must have a business connection—that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer.
- You must adequately account to your employer for these expenses within a reasonable period of time.
- You must return any excess reimbursement or allowance within a reasonable period of time.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
For more information, see the IRS publications below.
Publication 463 (2022), Travel, Gift, and Car Expenses | Internal Revenue Service (irs.gov)
Publication 535 (2022), Business Expenses | Internal Revenue Service (irs.gov)
2022 Publication 54 (irs.gov)
2022 Publication 517 (irs.gov)