Housing allowance with no church salary

by Keith
(Locust Grove Ga)

I am an ordained Assembly of God pastor of a very small new church. I do not get paid anything from the church. I teach at the local middle school. Can I take a housing allowance equal to my house payments each year?

Vickey's reply:
No. The housing allowance is limited to the LESSER of these 3:

1. The amount actually spent on eligible housing expenses.
2. The fair market rental value plus furnishings and utilities.
3. The amount officially designated in advance and PAID by the church as a housing allowance.

So with nothing paid...there would be nothing to report on the Schedule SE on your personal income tax return.

Note that if the church were able to pay you a housing allowance, those payments or the lesser amount described above...would be exempt from income tax, but not from the Self-Employment (Social Security/Medicare) tax .... unless you have opted out of SS.

Comments for Housing allowance with no church salary

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May 08, 2017
Get tax efficient
by: Bill OConnell

You are in a season where your compensation should be structured to be tax efficient.

By that I mean:
1. Are you going to get refundable credits on your 2017 form 1040? These are the EIC and ACTC?

2. If you are not eligible for #1, avoid the SE tax by maximizing the business expense reimbursements via an accountable plan and medical reimbursements via a Solo HRA allowed by the ACA.

Call me for info on point #1. 617-921-9321

See more info on point 2 in the Pay Your Pastor Corectly posted within the Blog on our website for Wisdom Over Wealth.

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

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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