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What is the housing allowance cap?

by Barbara
(Riceboro, GA Liberty)

We are a small congregation less than 40 persons.

In the past we have not designated a 'Housing allowance' and given the pastor a 1099-Misc for the full amount paid to him annually.

We have a new pastor and we are able to pay the pastor $600 per week. How much could be used as a housing allowance and how is that determined?

Comments for What is the housing allowance cap?

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Aug 21, 2022
 Determining a Housing Allowance
by: Vickey

Give him a housing allowance worksheet and once he completes it, turn it into the governing body and let them approve (and record in the meeting minutes in the form of a resolution) ... how much of his compensation will be designated as housing allowance payments.

I have examples of that housing allowance worksheet and resolution in my Church Accounting Package or let me know and I will send them to you...if you need them =)

Unlike compensation, there is no "cap" on designating a housing allowance. You could designate up to 100% of his $600 weekly compensation as a housing allowance, but be aware that he will be limited on how much he can claim as a housing exclusion on his personal income tax return. See my housing allowance page:
https://www.freechurchaccounting.com/housingallowance.html

Also, he would want to have "secondary" income to pay for non-housing expenses...if your governing body designate 100% of his compensation ...to avoid any "red flags".

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

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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