Two pastors Two amounts of housing allowances-How to Handle

by Kim

One pastor needs $1,000 and the other needs $2,000, so if the board wants to pay the lower amount to both, how is the higher expense pastor to handle the difference on his 1040?

Comments for Two pastors Two amounts of housing allowances-How to Handle

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Jan 19, 2020
Claiming a Housing Allowance Exclusion
by: Vickey

Ministers can only claim the lesser of the 3 amounts listed below when claiming the housing allowance exclusion on their personal taxes:

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

So, in the situation you outlined, the second minister would only be able to claim the $1000 the church designated and paid in housing allowance payments.

If that is all of his compensation, then all of his compensation would be exempted from federal income taxes and he would just have pay SE taxes on the 1k.

BUT if you are paying him more than that, but only designating a thousand of his total compensation for housing, you are doing him a disservice.

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