Housing Allowance Approval

by Beverly
(Kerrville, Texas USA)

Is there a process to get approval from the Federal Government before claiming housing allowance? Some sort of form to submit?

Comments for Housing Allowance Approval

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Feb 09, 2019
Report Housing Allowance on SCH SE
by: Vickey

You don't need approval from the IRS to claim your housing allowance. However...you should meet the IRS’ 5-test definition of a minister found in section 107 of the IRC to claim that income tax exclusion.

If you qualify as minister AND have been properly approved (by the governing body of your church) and paid a housing allowance, you will report and pay social security and Medicare taxes by filing Schedule SE (Form 1040) with your return.

See IRS Pub 517 for more information.

NOTE: don't forget in regards to how much you can "claim" as a housing allowance...you are limited to the lesser of the following amounts:

1) the amount officially designated (in advance of payment) as a housing allowance;
2) the amount actually used to provide or rent a home; or
3) the fair market rental value of the home (including furnishings, utilities, garage, etc.).

The payments officially designated as a housing allowance must be used in the year received.

Include any amount of the allowance that you can't exclude as wages on line 1 of Form 1040, U.S. Individual Income Tax Return. Enter "Excess allowance" and the amount on the dotted line next to line 1.

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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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