If your actual housing amount is more than your designated housing allowance, are you able to deduct it on your tax return?

If you are a minister and you have designated a housing allowance but your actual housing expenses are more than your housing allowance, are you able to deduct the amount on your tax return under other income as a negative amount?

Or are you out of luck. We pastor a small church and we have designated a large portion of our income as housing, but it isn't quite enough to cover our actual housing amounts.

Comments for If your actual housing amount is more than your designated housing allowance, are you able to deduct it on your tax return?

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May 16, 2021
Less of 3 Amounts
by: Vickey

You are out of luck =(

The IRS will only let you claim the less of these 3 amounts:

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 organization as a housing allowance

You may consider asking your governing body to amend your housing allowance amount for a greater portion of your compensation or even all of it.

If it ended up being more than your actual expenses or FMRV plus utilities, you would simply claim the "overage" as "other income".

However, please note that a housing allowance "amendment" is never retroactive, so when your tax preparer is doing your taxes next year, they will have to figure the correct amounts for your housing allowance exclusion...before the amendment and after...which they may charge you extra for =(

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