Can a pastor volunteer to designate part of his taxable salary as non-taxable HA to help rent a more expensive house that than congregation wants to pay for?

Our pastor rents a home for $2150 per month. We give him a housing allowance of $1500 per month. Can he volunteer to switch $650 from his taxable salary to tax-free HA to pay his rent?

Comments for Can a pastor volunteer to designate part of his taxable salary as non-taxable HA to help rent a more expensive house that than congregation wants to pay for?

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Jul 30, 2013

changing housing allowance
by: Sandi

Pastors have no say in what the church give's for their Housing allowance.
see https://www.freechurchaccounting.com/housingallowance.html

side note: the pastor can claim on their own 1040 (or whatever form they use) so the church does not need to change the amount prior to the end of the year.
There is a worksheet for pastors to help them figure if they can claim the whole amount, claim more, or pay tax on amounts over..
IRS pub 517 page 24:
http://www.irs.gov/pub/irs-pdf/p517.pdf

Jul 31, 2013

Amending a Housing Allowance
by: Vickey

As Sandi stated a minister cannot designate or amend his own housing allowance; however the governing body of a church can amend a housing allowance at any time during the year.

The important thing to remember with amending a housing allowance is that the new amount would only operate "prospectively"...also keep in mind you can designate up to 100% of his salary as a housing allowance.

Also as Sandi pointed out...your minister needs to be familiar with IRS Pub 517 as he is limited on the amount he can claim.

My recommendation is to speak to a “tax” professional before you amend the housing allowance, so it will be done properly.

The people at StartChurch seem to have it down to a science and might be a good resource for the Best Way to Set Up the Housing Allowance

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

If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)

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