SE Tax & Housing Allowance

by Jim Smith
(Groton, CT)

I am the Associate Pastor at our church. Although I meet the five criteria of a "minister", our church has treated me as an employee rather than self-employed. (When asked why this is the case, our Treasurer cites previous changes in the tax law, concluding that it's optional for any pastor other than the senior pastor of the church.). Therefore, the church withholds federal income tax, FICA & Medicare Tax, and state tax from my paycheck.

However, the church DOES provide me with a tax-exempt housing allowance. From what I read on this website, it seems to me that only self-employed ministers can receive a housing allowance.

Am I correct? Is the church inappropriately providing me with a a housing allowance? Would the way to correct while keeping my housing allowance be to treat/classify me as a self-employed minist?

Comments for SE Tax & Housing Allowance

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Apr 05, 2012
tax & housing
by: Anonymous

They are correct in using a W-2, most pastors are "dual" employees. The housing allowance is noted in box 14. Read IRS Pub's 1828, 517 & 525 to help you understand these issues, they will also refer you to other publications for more details.
The 15 series is for the employer but a good read to help you understand what they have to do.
Hope this helps

Nov 01, 2012
Housing Allowance for Qualifying Ministers
by: Vickey

You are correct. A housing allowance is for dual status ministers only.

If you qualify as a minister for federal tax purposes, then your church should not be withholding FICA taxes.

If you do not qualify as a “minister of the gospel”, then you are not eligible for a housing allowance.

I would ask the treasurer to have another look at IRS Pub 517 and tax topic 417.

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Join in and write your own page! It's easy to do. How? Simply click here to return to Minister Employee.

If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)

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