Housing Allowance is hurting me, I think

by Stacy
(orlando, fl)

My church allocated $20000. towards housing allowance for me, which is my whole salary.

It feels like I am paying more because of the self-employment tax on the $20000 then if they just made me a regular employee and took out their portion of social security/medicare and then I could pay my portion.

What am I missing? I thought housing allowance was going to help me?

Comments for Housing Allowance is hurting me, I think

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Mar 10, 2018
If you are a Minister, you CANNOT be treated like a Regular Employee
by: Vickey

The IRS consider ministers to have a dual employment status.

Which means ministers are considered an employee for federal income tax purposes and self-employed for Social Security and Medicare purposes. SO ...like self-employed individuals...they pay their own social security taxes.

Churches cannot treat ministers like "regular" employees. It is not a pick and choose thing.

So if you:

1. are licensed or ordained

2. administer the sacraments of the church (weddings, funerals, baptisms, and communion, etc...)

3. are considered a religious leader by the church

4. conduct religious worship

5. have management responsibilities in the church...

you are considered a minister and your church CANNOT withhold FICA (Social Security and Medicare) and they CANNOT match it.

You are under the SECA system ....not the FICA system.

Click on the SITE MAP at the top and read the pages in the "Minister" sections for more information.

Which does seem to put ministers at a slight disadvantage =(

But they do get a tax benefit that most "regular" employees cannot get...a housing allowance =)

A housing allowance is is simply a portion of a minister’s compensation that is designated in advance by the minister’s employing church as an allowance to help with housing costs.

It is beneficial for ministers because it is excluded from federal income tax. However, it is not exempt from the minister’s self-employment tax =(

To help figure how much SE tax and income tax you are going to owe There is a great withholding calculator for ministers on StartChurch's site:
https://www.startchurch.com/app/withholdings-calculator

Use it to figure how much tax you are going to owe and then either ask your church to withhold income tax for you (the extra withholding will cover your SE tax) or send in quarterly tax payments.

Again...please review my "minister" pages to learn more. Go to TOPICS in the TOP menu and then to MINISTERS.

Also, I have an ebook on Minister in my Church Accounting Package. Go to PRODUCTS in the top menu and then CHURCH ACCOUNTING PACKAGE.

Contact me and I can send it to you if you don't need the complete package.

Mar 29, 2018
Housing Allowance is hurting me
by: Anonymous

I also don't see an advantage on having the Housing Allowance. Since, we have had to pay every year. Can we get out of receiving Housing Allowance?

Apr 08, 2018
Can we get out of receiving Housing Allowance?
by: Vickey

Yes. talk to your Board about approving [all] of your compensation as taxable wages.

BUT be forewarned that the amount of your "prior" housing allowance ...now declared wages...will be subject to that same self-employment tax AND an additional income taxes as well.

So...can't see where it would "save" you money to have all of your income declared as "taxable" income?

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