Excessive Housing Allowance?

by Ruth
(Newark DE)

For 2014 my Pastor's W2 reflects a salary of $5,150 in box 1 and a housing allowance of $96,750 in box 14. This year there will be no salary - just the housing. We are a very small congregation. Is there a percentage or a formula to determine the housing allowance? Does the amount we give him seem excessive? Do we need to have documentation to justify what we give him?

Thanks in advance for your response.

Comments for Excessive Housing Allowance?

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Feb 16, 2015
Excessive Housing Allowance. . .?
by: Lewis in NC

There is not a percentage or formula to establish the housing allowance for your qualifying clergy. You can read about the housing allowance to the left under Minister Taxes I think.

I hope the church's housing allowance was based on the estimated housing expenses given by your clergy member for 2014. This should have been approved by your church leadership by the end of 2013. $8,062.50 per month would seem excessive to me unless there were very special circumstances that could explain why it is so disproportionate BUT needed for this year.

If you do your W-2 as you indicate then the church will be fine; the clergy involved will be responsible for reporting these figures on his/her taxes and if audited will have to present the supporting documents necessary to substantiate them--not the church.

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Join in and write your own page! It's easy to do. How? Simply click here to return to Minister's W-2.

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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