parsonage deduction from income

by jwest
(tennessee)

My church does not provide a check or reimbursement for parsonage expenses, rather it provides a pre-approved amount that can be counted as parsonage allowance. Should I subtract this amount from my actual income and report the difference on my taxes as my actual income since I never get a check from my church?

Comments for parsonage deduction from income

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Apr 19, 2013
parsonage deduction from income?
by: Anonymous in NC

This depends on several things--your church may have already subtracted the approved housing allowance from the amount that is reported in Box 1 of your W-2 form. If they haven't then you could exclude (or adjust what they have excluded) from taxable income the lesser of the following:

•The amount actually spent on eligible housing expenses.

•The fair market rental value plus furnishings and utilities of the parsonage you live in.

•The amount officially designated in advance as housing allowance.

A nonexempt qualifying minister with an approved and designated housing exclusion must report the lesser of the above amounts on a SE schedule on their personal income tax return. The amount is excluded from income tax, but ministers must pay self-employment taxes on the housing excluded amount.

Read the information at this website for Clergy/Ministers--Housing allowance.



Jan 10, 2014
fair housing allowance
by: Anonymous

So as I read the information I see that the pastor has an exemption that non-pastors do not have, that is the freedom to subtract the housing allowance from being taxed.
Now , I would like to have some comments on the integrity and the reasons being this. First, is the intention of the allowance designed to give Pastors an advantage that no one else has, or was the intentions for it due to the fact that many Pastors noticeably did not have the ability to own their own home as easily as the average laymen?
Or maybe did this practice start because a parsonage was sometime available by the church or supporting membership or association credited for the support of the Pastor and a HA was replaced for a parsonage? In other words, was the parsonage or the expense for housing a large percentage of the Pastors' compensations and considered a necessary element for living expenses in days gone by and now some churches are still per suing the advantage for taxation?
What I am getting at is two fold? Are churches riding on an advantage to avoid taxes by splitting the HA and the salary. Does it seem fair to give the Pastor a tax break if he is using the HA to purchase his own home rather than renting in order to be at the location and area of the church without a parsonage, especially if the salary is reduced for the explicit reason of adding an Housing Allowance as part of his compensation ? Pastors who are, as many I'm sure, payed meager wages would need this as a tax break, yet Pastors who are payed very well might best consider to pass on HA tax breaks. What is your thought please?

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