Associate Pastors and Housing Allowance

We have an associate pastor who reports to the Pastor as his boss. Can the associate receive a housing allowance?

Currently we give a housing allowance and salary. We take Federal Taxes and Social Security taxes out of his check.

We only withhold these on his salary and nothing on his housing allowance. Is this correct, or because he is an associate he should be treated as an employee for all pay?

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Associate Pastors and Housing Allowance
by: Anonymous in N C

You have several questions going here, but basically the answers are that church employed Senior Pastors and Associate Pastors are treated the same if they meet the 5 question criteria set up by IRS.

They are treated as employees for income tax purposes and self-employed for social security tax purposes.

The housing allowances for each are NOT included in income when the pastors figure their income tax liability, and housing allowances ARE included in income when he/she figures their Social Security Tax liability.

It should be at the option of ALL pastors whether to have income taxes withheld from their pay each pay period. They can opt to pay their income taxes on their own using estimated quarterly tax arrangements or they can have the church withhold income taxes for them.

More details on your questions can be found at this website under the tab category (to the left of the home page), "Clergy/Minister. Thanks for your questions.

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