Youth minister housing allowance

by Debbie Smith
(Hiwasse, AR)

Can our youth minister have his entire salary in housing allowance since he is bi-vocational?

Comments for Youth minister housing allowance

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Aug 21, 2022
Classify as a Minister for a Housing Allowance
by: Vickey

Whether he is bi-vocational or not would not have anything to do with a housing allowance determination.

You would have to make sure the IRS would "classify" him as a "minister".

The IRS looks at several factors to make that determination...

1. First and foremost: They MUST be licensed, ordained or commissioned (if this "test" is confirmed then you can consider the other 4 below)

2.Administer the sacraments of the church (weddings, funerals, baptisms, and communion, etc...)

3. Be considered a religious leader by the church

4. Conduct religious worship

5. Have management responsibilities in the church

If you determine that the IRS would classify the individual as a minister...then set up their payroll accordingly (NO FICA!) and... yes... the governing body could approve and designate all of his compensation as a housing allowance.

Just remember that they are limited on how much they can claim as a housing exclusion on their personal income tax return.

See more on housing allowances, by clicking on "Resources" in the top navigation bar and then click on "Minister Taxes". Then go down to "Designating All Salary as Housing Allowance".

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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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