Can housing allowance be greater than chruch paid income?

by Earl
(Ashland, OR)

Our Pastor has two income streams; one from the church and one from outside the church. His housing expenses exceed the income from the church. Is he entitled to a housing allowance greater than his income from the church?

As an example, let's say he earns $7,500.00 annually from the church. Is he legally entitled to claim the $18,000 it take to maintain his home?

Comments for Can housing allowance be greater than chruch paid income?

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Amount Claimed for Housing Allowance Exclusion
by: Vickey

I just wanted to add to what Marcus has stated.

Please remember that a minister can ONLY claim the LESSER of these 3 amounts:

  • The amount actually spent on eligible housing expenses.

  • The fair market rental value plus furnishings and utilities.

  • The amount officially designated in advance as housing allowance.

So even if your church designates 100% of your pastor's compensation as a housing allowance and that amount is LESS than his actual expenses...he can still only claim the amount the church designated as a housing allowance.

Using your example above, he would only be able to claim the $7,500 IF that amount was designated and preapproved as housing allowance.

Housing Allowance
by: MarcusinTexas

I would say "yes" if the following things occur:
First, the church members or the elected finance / stewardship committee have approved the proposed or requested housing allowance not later than December 31 prior to the year in which the allowance is to be paid. And, second, if the pastor is able to fully document the $18,000 requested housing allowance and with the understanding that any portion of the housing allowance that cannot be fully supported should there be an audit, will be reported by the pastor as taxable income.

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