Tax Responsibilities with a Parsonage

by Chris

Our church is considering bringing on an Associate Pastor whose only compensation would be a parsonage.

For tax purposes, he is licensed. My understanding is that his compensation (the parsonage) would be exempt from federal taxes but he would still be responsible for self employment taxes (unless he chooses to file IRS form 4361) on the Fair Market Value of the home.

Is that correct?

Also, does the church have any tax responsibility in this case?

Thanks for your time!


Comments for Tax Responsibilities with a Parsonage

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Jun 04, 2015
Tax responsibilities with a parsonage. . .
by: Anonymous

If the associate pastor fully qualifies for a parsonage, then yes you are correct. The church administration should approve and include in the minutes of the church meeting and report in a letter to the associate pastor an amount of approved housing allowance based on the fair market rental value of the parsonage (furnished w/utilities). This amount would be that value for the remainder of this year (6 months), if he/she moves in before the 15th of June.

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