941-difference between housing allowance and fair value of parsonage

by Karen
(Algonac, MI)

Last yr the Pastor was part-time and not yet qualified as a licensed pastor, so he got a housing allowance and Fica was taken from his wages which the church paid. The housing allowance was deducted from his gross earnings.

This year he is a licensed minister, and the district removed the housing allowance and added the "fringe benefit" of "parsonage fair value".

My question is: On the quarterly 941 I report the total wages paid, but only figure the Fica based on the earnings of the Office Admin.

So, is the "Parsonage Fair Value" included or excluded from the Total Wages Paid on the 941.

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Jan 22, 2022

by: Vickey

There are several "issues" that need to be address in your post.

First of all, housing allowance payments are considered "nontaxable" income and NEVER included on a quarterly 941. I am not sure what a "parsonage fair value" is...but if it is income ...is should not be included on the 941.

If you are providing a parsonage for your pastor and you are referring to the "value" of living in the parsonage....that value is not included in the 941 either.

Secondly, if an individual does not qualify to be classified as a minister ... he does not qualify for a housing allowance =( I know it may be too late to do anything about it now...but I want readers to know that a "red flag" to the IRS is a taxpayer that the church withholds FICA AND receives a housing allowance from that same church =(

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