Is it a bad decision for the pastor to take a housing allowance due to the SE tax?

by Ann Fairchild
(SC)

We chose the housing allowance because we thought it avoided payroll taxed for our church. It appears that it will now double our finacial responsibilities on that money since we will owe 15.3 % and the church pays nothing.


Know the answer? Face the same situation? Please post your answer or comment by using the "comment" link below. Thank you!

Comments for Is it a bad decision for the pastor to take a housing allowance due to the SE tax?

Click here to add your own comments

Jan 29, 2011
Taxes on a housing allowance
by: Vickey

If you took a regular salary, you would owe not only the self-employment tax, but income tax as well.

The IRS considers ordained ministers to have a “dual status” . Which means a minister is considered an employee for federal income tax purposes and self-employed for Social Security and Medicare purposes.See this page for more details.

So the church does not pay the self-employment (social security) tax or FICA on a minister....
although a church can set up a Social Security allowance up for a minister...just be aware that it would be taxable and need to be reported on a W-2.


Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Fringe Benefits.

Need a Consultation, help setting up an effective Accounting System, or someone to do your monthly bookkeeping?