Housing Allowance Amendment

by Mark
(Virginia)

Can a housing allowance be amended during the year? For instance, the pastor runs into a major repair that was not anticipated when the housing allowance was approved by the board. Can the pastor come back and ask for an additional sum to be approved?

Comments for Housing Allowance Amendment

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Dec 03, 2014
Minister Responsible for Determining FMV
by: Vickey

Yes, the fair rental value of the parsonage will have to be added when the minister is figuring his self-employment tax; however, the minister is responsible for determining the fair rental value of the parsonage.

Dec 02, 2014
Parsonage instead of income
by: GRey

Pastor is bi vocational
He is not receiving income from the church.
We set up a parsonage for him on the church grounds.
Would we need to figure out the rental value of the parsonage?

Nov 08, 2014
Housing Allowance
by: Donna

Housing allowances are the one of the hardest thing to understand with a pastor's compensation. The church must first designate a housing allowance before the first of the year, before the pastor earns an income. And it must be done in writing or some sort of formal document. A line in the budget is also a good idea.

As to your question about changing the amount of allowance, the short answer is "yes" it can be done, BUT there are stipulations to this process. When an unexpected housing expense arises, the allowance can be changed, but only for the rest of the year. I had to do this one time and my auditor suggested designated the balance of the pastor's earnings to housing, up to the amount that the yearling allowance needs to be increased. Example: If pastor's HA is $10,000 a year, but 6 months into the year he has a huge housing expense, lets say $5,000, which would mean he needs to net a $15,000 HA for that year. So for the balance of the year his HA needs to be increased $10,000 ($5,000 for the normal HA and $5,000 for the increase). So after the board or elders or whoever approves the allowance has approved this increase, in writing, you would designate only his future earnings to his HA, up to $10,000. (I hope that isn't too confusing. The first time I had to do it, I was so confused, but once you wrap your mind around it, it makes sense.)

I go to the Minister's Tax Guide which is produced by GuideStone Financial Resources for a lot of my questions concerning the minister's and the church's responsibility concerning the IRS. For this question, I went directly to their Housing Allowance Q&A page (http://www.guidestoneretirement.org/FormsandFAQs/FAQs/Housing%20Allowance). The answer to this particular question I found under "What happens if a church forgets to designate a housing allowance?"

I hope that helps with your issue now. I have found the Minister's Tax Guide to be so beneficial to answering all these questions. GuideStone publishes this guide every year, keeping up with all the IRS and government changes, so you don't have to read all the IRS manuals. Ugh to that.

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