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Housing Allowance and SE Tax for Retired Ministers with Second Ministry Career

If a Minister retires from the Govt/Military (was a military minister) and receives a 1099-R for retirement pay, but then starts a second career as a minister for a new civilian church, can the housing allowance paid by the new church qualify as Housing Allowance not subject to S/E Tax under the retired ministers IRS rule making housing allowances not subject to S/E tax?

The Civilian Church W2 has $0 in box 3 and 5 and includes a housing allowance in box 14.

Comments for Housing Allowance and SE Tax for Retired Ministers with Second Ministry Career

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Mar 06, 2022
 Retired Ministers can Receive Part of their Pension as a Housing Allowance
by: Vickey

" A retired minister may receive part of his or her pension benefits as a designated parsonage
allowance based on past services." excerpt from the IRS's Ministers Audit Techniques Guide:

https://www.irs.gov/pub/irs-utl/ministers.pdf

Since he is being paid a "housing allowance" from a new church as compensation for services rendered, I don't believe it would be "exempt" from SE taxes ... unless he was approved to "opt out" during his first 2 years of ministry.

HOWEVER... please please have this minister consult a knowledgable tax professional regarding his specific tax situation and under no circumstances... replace what he reads off the internet for that very important advice!

Especially if part of his military pension has been designated as part of a tax free housing allowance! He does not want the IRS to consider him NOT retired in regards to that special retirement benefit!

I can recommend someone if he cannot find a tax professional that has the knowledge to help him.

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Join in and write your own page! It's easy to do. How? Simply click here to return to Housing Allowance.

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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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