Do you include a housing allowance when calculating for Earned Income Credit?

by Trey
(Bel Air, MD)

Bottom line...Does an ordained minister have to include his housing allowance when calculating for Earned Income Credit?


It seems that even the IRS website gives conflicting info on this topic.

vickey's reply

Section 32(c)(2)(A) of the tax code includes both employee compensation and net earnings from self-employment within the definition of earned income.

So using that definition, a housing allowance should be considered earned income and included in calculating your earned income credit...unless you have filed an IRS Form 4361 and have been approved for an exemption from self-employment tax.

Comments for Do you include a housing allowance when calculating for Earned Income Credit?

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Oct 15, 2011
about eic
by: Anonymous

The IRS says the following...

A minister who receives a housing allowance may exclude the allowance from gross income to the extent it is used to pay expenses in providing a home. Generally, those expenses include rent, mortgage interest, utilities, repairs, and other expenses directly relating to providing a home. The amount excluded cannot be more than the reasonable pay for the minister's services.

Since the EIC is figured from AGI it seems that housing allowance would not count toward EIC

Dec 07, 2011
SS and IRS view housing as earned income
by: TN

Both the SS administration and the IRS view income included as housing allowance for ministers as income earned for determining maximum allowed to be earned for total included against SS max allowed or the Total income for earned income credit eliegibility.

Feb 06, 2012
IRS only used the AGI for the EIC for me.
by: adam

This has been a puzzling issue for me. I use Turbo Tax each year to file my taxes and it has consistently puts my Housing Allowance and AGI together to figure out the EIC. Yet last year the IRS went through my return and sent me a much larger EIC return. They ran the numbers and based it on the AGI of my return. I called the IRS and talked with them a couple times about this and they assured me that they did not make a mistake. My return has "Clergy" printed right next to my EIC amount on my return. So it was plain. It seems to me that this year I will claim the EIC according to the AGI. But I don't know how to do that with Turbo tax...

Jun 17, 2013
Clarification from IRS
by: Anonymous

This may be old news, since the comments here are a couple years old. But the IRS has now specified on their website that the housing allowance is included in earned income calculations. See "minister's housing" under rule 7.

http://www.irs.gov/publications/p596/ch01.html#en_US_2012_publink1000167243

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