by Vickie
(Texas)
Does an approved 4361 mean that a minister pays no income taxes at all? If so, is there any reason to designate a housing allowance?
3Comments
Clarification
AAnonymous
That is, exempt from all income tax on income earned as a minister. I know they must pay on income earned by other means.
Exempt from paying all income taxes?
LLewis in NC
No way!--only Self-Employment Taxes, i.e. . . .Security Taxes. Be careful though; you will lose all the potential benefits later in life of those taxes as well.
Housing/Parsonage Allowance
PPstr. R Rizzi, Farmington, NH
An approved 4361 only means the pastor becomes exempt from paying into social security but will still pay income tax.
The Housing or Parsonage allowance is an amount designated out of the pastor's salary that becomes non-taxable income when it is used for the upkeep on the parsonage.
He can buy things pertaining to maintenance as well as decor, etc.
I recommend seeking the counsel of the CPA who is born again and has extensive experience in dealing with clergy tax otherwise you will not get the right counsel.
Blessings
The Housing or Parsonage allowance is an amount designated out of the pastor's salary that becomes non-taxable income when it is used for the upkeep on the parsonage.
He can buy things pertaining to maintenance as well as decor, etc.
I recommend seeking the counsel of the CPA who is born again and has extensive experience in dealing with clergy tax otherwise you will not get the right counsel.
Blessings