Church's liability for stating housing allowance correctly

What are the consequences if a church gives a pastor housing allowance that they shouldn't have? Does the burden fall on the pastor or the church? Thanks.

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Church's liability for housing allowance
by: Lewis in NC

It is my understanding from reading IRC 107 that the pastor cannot "declare" his/her own housing allowance. The pastor must request approval of one by the church administration from his/her estimated housing expenses on a year to year basis.

Pastor's responsibility
by: Anonymous

Housing allowance is a tax break for ministers.
This is what the IRS says. Clergy Housing/Parsonage/Manse Allowance Code section 107.
"The pastor assumes full responsibility for complying with IRS definitions of "cost to provide a house."

A housing allowance paid as part of salary is not income to the extent you use it, in the year received, to maintain and furnish a home. The amount of the housing allowance that can exclude from income cannot be more than the reasonable compensation for your services as a minister.

I would think if the pastor declared a housing allowance and it is in your Board minutes. It is his/her responsibility. I am not sure how this works with the IRS if your congregation declared the housing allowance. However, I would think if you followed the "reasonable Compensation for pastoral services guideline you would be okay.

You might want to check out the IRS code section 107.

Questioned housing allowance. . .
by: Lewis in NC

It is up to the pastor when he/she files federal and state income taxes and self-employment taxes to make the correct determination on this. It is even better if the correct determination happens before he/she ask the church for a housing allowance.

We as individuals, when signing our tax returns, are assuring that all is in compliance with the laws governing them.

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