Does the HA have to be a direct expense of the church?

by Lisa
(GA)

I have read where the HA does not have to be an actual expense for the church. Like, if it is a small church that is unable to compensate with a salary, the board can establish a HA for him to take advantage of for his compensation as long as it meets all IRS rules. Is this correct?

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Oct 19, 2014

Ministry-Related Income Exclusion
by: Vickey

Yes, the board can establish a housing allowance for their minister, but it would still be an actual expense for the church and need to be processed through the church records.

If you are asking if the church can designated a HA and not pay their minister anything then the answer would be no. A housing allowance is an [exclusion] from paying income taxes on [ministry-related] income. No ministry income...no housing allowance exclusion.

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