How to calculate when NOT to take a housing allowance?

by Kelly
(Orlando, FL)

I've heard a few experienced ministers and ordained ministry leaders say that there are times when it costs more in taxes to claim a housing allowance than to not use that benefit.

How can we compute the tax benefit vs. tax expense to determine whether to take a housing allowance? Cannot seem to get my head around this one...

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SECA results in excess tax burden?
by: Kelly

I think the case of when not to take the Housing Allowance is made by some is that there are times when paying SECA adds more tax burden (income tax + SECA) than not taking the allowance.

I still have a mental challenge to see where that is the case for most. I'm not that good at calculation of total tax, so might be overlooking the possibility that in some cases apparently the HA is not helpful. Perhaps it is high salary and home is paid off (or almost so) resulting in higher tax burden?

Hmmm,,,, anyone out there that can show me the math my chemo brain is not seeing?

Housing Allowance Costs More in Taxes????
by: Vickey

I cannot think of a situation where it costs more in taxes for a minister with a housing allowance than being paid that same amount as taxable wages????

All clergy compensation is subject to the self employment tax (unless they have opted out of SS)...including a housing allowance; however, housing allowance payments are not subject to income taxes...so again...I cannot really wrap my head around that one either =(

However, I am not a tax professional, so I would advise each minister to consult their tax advisor on their own personal tax situation.

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