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Hourly Employee Housing Allowance

We have a part-time associate pastor who we are looking to convert to hourly (rather than PT salary). Currently, a portion of his salary is allocated as a housing allowance.

Is it possible to claim a HA while being an hourly employee?

If so, how would that work on a regular paycheck? Would the HA be “funded” first & then the rest of the pay toward the remaining hours? If so, what about a (rare, but possible) situation where he doesn’t work enough hours in a pay period to meet the HA level for that period first?

Converting to hourly makes sense for our circumstances in just about every way - except for this possible wrinkle. Any help would be greatly appreciated!

Comments for Hourly Employee Housing Allowance

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Dec 24, 2021
 Housing Allowance for a Hourly Employee
by: Vickey

I am not a tax professional ... so I am going to give you my "thoughts" then recommend a "expert" =)

I would think that the church would have to "designate" a set amount for the year and then pay that "designated" amount every payday (it would not depend on hours work).

Then you could pay him a wage for the hours worked, BUT make sure you check with the state laws and pay him at least minimum wage.

Recommended "expert":
https://www.ministrycpa.org/

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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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