Housing Allowance

We have a small non-profit incorporated church/ministry & I am a licenced & ordained minister.

Our board designated a housing allowance years ago & is in our minutes. The ministry is to pay the actual housing expenses.

I keep track of them every month & keep them on a spreadsheet. If the ministry doesn't have the money at the time to pay, it is record as a payable to me & I am paid when the ministry has the money.

The ministry didn't bring in much income in 2010, but my housing allowance adds up to around $18K. I'm confident the ministry will bring in funds in the future above & beyond this amount.

Is it alright to record this $18K housing allowance expense to the ministry for 2010 & offset as a payable to me & receive these funds when the ministry has income in the future?

Comments for Housing Allowance

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by: Mary

We are a small congregation that just started and we included in the organizational board meeting minutes, the following statement
"9. a) Upon motion made and carried, the annual salaries of the officers were fixed at the following rates until the next annual meeting of the Board of Directors:

President $ _______0_____________

Vice-President $ _______0____________

Secretary $ _______0_____________

Treasurer $ _______0_____________

Board Member $ _______0_____________

Board Member $ ________0____________


The chairperson informed the meeting that under the tax law, a minister of the gospel is allowed to exclude from gross income: (1) the rental value of a home furnished to him as part of his compensation; or (2) a housing allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home and to the extent such allowance does not exceed the fair rental value of the home, including furnishings and appurtenances such as a garage, plus the cost of utilities.
The church council/Board of Directors on the day of , _________ after discussing the amount to be paid to Minister ________ as a housing allowance, on motion duly made and seconded, adopted the following resolution:
Pastor_________ shall receive salary of $0 for now due to the fact that we are just starting and we are a very small congregation. This will be Re-evaluated at the next board meeting. Pastor Bayron Perez shall receive a housing allowance of up to $1000 a month for the year 2012 and all future years unless otherwise provided.
The housing allowance shall be so designated in the official church records.


Church Paying Actual Housing Expenses
by: Vickey

There are several factors that come into play with your question.

First of all is the practice of your church paying your actual housing expenses. According to Richard Hammar (who in my opinion is the top expert in church and clergy taxes), the practice of churches designating and paying a minister’s actual housing expenses should be avoided since it may not satisfy the IRS requirement that the housing allowance be designated in advanced.

Under this approach there is no way to know how much of a minister’s compensation a housing allowance until after expenses are incurred. This is not consistent with the income tax regulations. Taken from Church and Clergy tax Guide 2011

Second factor is carrying over the “housing allowance” owed to you into the following year.

You are only allowed to exclude from income tax as a housing allowance the lesser of the following three:

• The amount actually spent on eligible housing expenses for that calendar year.
• The fair market rental value plus furnishings and utilities for that calendar year..
• The amount officially designated in advance as housing allowance for that calendar year.

This amount must be reported on a Schedule SE on your personal return and appropriate self-employment tax paid. Any amounts above that must be report as income and appropriate taxes paid.

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