Does HA have to begin before start of new fiscal year

by John
(Houston, TX)

We have decided to ask for the housing allowance from our church employer but now it is almost March. Can we start the HA now and just pay the full taxes for Jan/Feb?

Comments for Does HA have to begin before start of new fiscal year

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Feb 22, 2017
More information is needed
by: Bill OConnell

John
Your question does not provide enough information to provide an informed answer. Housing Allowances are not simply "asked for". There is a simple, but formal approval process that is needed. Where are you in that process?

Wisdom Over Wealth provides a complimentary consultation that would be worthwhile for you to take advantage of.

Bill

Jun 12, 2019
Later designation of housing allowance.
by: SomeDeacon

The IRS Pub 517 requires only that the housing allowance be officially designated prior to the income. So I believe that yes your church could choose to officially designate a new or changed housing allowance at any point during the year which would then apply to all subsequent payments that year.

The church’s W-2 form income calculation and the pastors taxes may be a bit trickier, but the tax savings should be worth the effort. Designating correctly at start of year or start of employment is best, but there’s no legal reason why churches cannot fix or adjust the HA later in the year—as long as the new designation is officially recorded and it is not applied retroactively on previous payments.

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