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CHURCH ACCOUNTING PACKAGE

Housing Allowance

Do you report the gross salary on the W-2 and put the Housing Allowance Total in Box 14 or subtract the Housing Allowance from the gross salary?

EX. Salary is $26,000, Housing Allowance is $16,000. Do you put $26,000 and $16,000 in Box 14 or do you put $10,000 as gross salary?

Please advise

Comments for Housing Allowance

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Dec 07, 2016
 Housing Allowance
by: Anonymous

Hello there..whatever is considered salary is not the same as housing allowance.

If the total amount of money he receives, including housing allowance, is $26,000, then you must separate the two.

He only pays tax on the portion that is considered salary. He doesn't pay tax on the housing allowance.

You must classify them as salary and housing allowance separately. Otherwise, he will be overpaying tax.

Please remind the pastor that he must keep all receipts and expenses made in reference to his home, electric bill, water bill, repairs, lawn service, landline phone bill, etc, etc..

He needs to use all of that when filing his personal income taxes. It ties in directly with the housing allowance that he receives during the year. God bless.
Dec 07, 2016
 Great Answer!
by: Vickey

I totally agree with the previous post!

Just want to add that unless your minister has filed and been approved to opt out of Social Security...he will have to pay a self employment tax on the housing allowance...but not federal income taxes.

As far as state taxes...most states exempt housing allowances...but there are a few that do not...so check with your state tax agency.

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