How to report 100% Housing allowance

If a church were to pay its pastor a small amount and designate it all as housing allowance, such as in your $500 / month example above, how would it be reported? Would the church still be required to issue a W-2?

Comments for How to report 100% Housing allowance

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Apr 13, 2019

by: Vickey

You do not report housing allowance payments on a 941, so if that is the only compensation your church is paying, you would not need to file that quarterly form.

Many smaller churches that designate all of the pastor's compensation as a housing allowance ...just provide that minister with an annual notification letter stating the amount paid as a housing allowance.

Some church tax experts suggest that you complete a W-2 with zeros in Box 1, 2, 16 etc. and report the housing allowance in Box 14, but be aware that if you do that many tax software such as Turbotax won't let you enter it in with zeros in those boxes.

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