Paying Housing Allowance AND providing a parsonage w/utilities

by Susan
(Illinois)

Our church provides our pastor with a parsonage and utilities, free if charge.

He is also paid a salary per week. He wants to have all of his salary designated as housing allowance, even though the house is provided and he has no housing expenses.

Can this be done legally?

I think the salary should be considered income for tax purposes, and the Fair Rental Value of the parsonage and utilities be calculated and included when figuring out the self employment tax.

Comments for Paying Housing Allowance AND providing a parsonage w/utilities

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Oct 14, 2017
It is possibly legal, though I am not a lawyer. A lawyer would need to be asked for that!
by: Lewis in NC

You didn't say what his/her salary is, but if it is small and the actual additional housing expenses he is going to supplement for his housing cost out of pocket are projected to be equal to that salary for the year, it would in my nonlawyer mind be legal. If he pays his utilities, gas, oil, electric, phone, internet, does renovations, painting, repairs, renters insurance on that church-provided house for the year out of pocket, these cost to him/her could be counted in the approved housing allowance figure.

You would NOT add the value of his provided house that he lives in rent-free and church-paid utilities back to salary and take Social Security tax withholdings on them. He/she is responsible to do that very thing when filing their federal taxes, through the self-employment tax form and process. Hope this helps.

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