Can Nursing Home Expenses be Claimed as Housing Allowance?

If the clergy person is a permanent resident of the nursing home, the housing allowance applies to the nursing home because the nursing home is the minister’s primary residence. Charges for food and medical care are not considered housing expenses. Ask the administrator of the residence to provide the portion of their monthly payments that…

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Housing Allowance for Clergy Couples

Clergy couples are limited to the equivalent of one housing allowance between the two incomes, providing they live in the same location. In this instance, clergy need to be mindful of the amount requested by each spouse in the annual housing allowance resolution. Generally, any expense to provide or maintain the home can be used to justify…

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What type of housing expense records should clergy be keeping?

Ideally, clergy should keep careful housing expense records to determine whether expenses are greater or less than the annual designation. Records are also important for estimating a reasonable housing allowance for the next year. Original receipts, invoices, canceled checks, charge card records, etc. are all essential. To simplify record keeping, some pastors find it helpful to have one charge…

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Long-term disability: Pre-tax or after-tax?

Long-term disability (LTD) insurance provides you with income if you become disabled and are unable to work. Although your church may pay the full premium for this coverage, you can choose whether the premium is deducted from your pay before or after taxes.  Important tax considerations are as follows: If you choose to pay for…

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Designating 2018 Housing Allowance

A housing allowance is a portion of clergy income that may be excluded from income for federal income tax purposes (W-2 “Box 1” wages) under Section 107 of the Internal Revenue Code. To be eligible, the pastor/clergy must be a “minister of the gospel” and be ordained, licensed, or commissioned by a church, convention or…

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Do you need an official designation for Housing allowance?

2018 Housing Allowance Form The allowance must be officially designated in advance by the church. The designation should be stated in writing, preferably by resolution of the governing body and/or in an employment contract. In addition, the designation should be recorded in the church budget and payroll records. If the only reference to the housing allowance is…

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Housing / Parsonage Pros and Cons

When the United States began, most pastors lived in church-owned parsonages, and the US carried over the common European practice of not taxing that as income. The basis of the housing exclusion from taxable income is deeply rooted in our nation’s tax history. In 1954, the provision was expanded to include the “cash” rental allowance paid…

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How to Claim Housing During Interim Ministry?

Churches normally hire an interim minister for the time between the departure of a pastor and the calling of a new pastor or a “sabbatical interim pastor” when a pastor is granted sabbatical leave. Full-time, interim ministers are usually paid on the same scale as other fulltime clergy. For part-time service, the percentage of time…

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Fair Rental Value Limitation

Currently, IRS has no written procedures concerning the method or frequency for determining this value. In its Audit Technique Guide for Ministers, the IRS tells its agents that determining the fair rental value of a parsonage “is a question of all facts and circumstances based on the local market . . .” It also suggests…

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What Qualifies as Housing Expenses?

Common eligible expenses include mortgage payments (principal and interest); rent payments; real estate taxes; property insurance; utilities (gas, electricity, water, sewer, garbage pickup, local telephone service); appliances and furniture (purchase or rental cost and repairs); remodeling expenses; homeowners’ dues; and pest control. Any expense to maintain and furnish a home. Cleaning services, food, domestic help,…

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