If I pay off my mortgage, how does that affect the housing allowance?
Ministers who live in the same home for a long time may reach the point where they are paying off their mortgage. At this point, many ministers wonder how not having a mortgage will affect their housing allowance. Fortunately, you can still qualify for the housing allowance if you have paid off your mortgage. However,…
FAQ: Can I only change my housing designation once a year?
No, you can change your designation at any time throughout the year, and you can amend it as needed. IRS details the housing allowance in section 107 of the Internal Revenue Code. While the IRS does not specify when you can designate, they do specify that designating must be done in advance. You can only…
Can a storage unit rental qualify for housing allowance?
Question – Can I claim storage unit rental as an expense related to housing allowance? Answer – No. IRS only allows expenses related to your primary residence. A separate storage unit is not attached to the home in any way, so it cannot be used as a housing expense. A similar situation occurs with utility…
I work for many different churches and get paid on a 1099-MISC. Can I still designate a housing allowance?
Most ministers work for one church and receive a W-2. However, there are ministers who do not have a regular church and end up getting paid on a 1099-MISC during the year. This includes ministers doing pulpit supply and traveling evangelists. Can these 1099-MISC payments be eligible for a housing allowance? The answer is yes,…
Can I designate a housing allowance for multiple years?
A frequently asked question about Clergy Housing is whether a minister must re-designate their housing allowance every year or if they can simply enter a designation that covers multiple years. Surprisingly, Clergy are able to designate for periods longer than a single year. IRS does not specify how long a housing allowance designation must remain…
Can my severance pay be designated as housing?
Whether it is through resignation or retirement, a Church may agree to pay severance pay when a Minister leaves a position. In almost all cases, this severance pay is considered taxable income to the pastor or minister. The question then arises- could you designate this severance pay as housing? This is actually a question of…
Can Construction Costs be used for the Housing Allowance?
If you’re building a new home or you’re renovating an existing home, you may be wondering: Can I include these construction expenses for my housing allowance? The IRS and federal tax courts have been very clear that Ministers are only permitted to use one residence for the housing allowance. If you have two homes, you…
Don’t lose the housing allowance on your 403(b)!
The Housing Allowance is one of the best tax benefits currently available to clergy today. Clergy can use a housing allowance to exempt a portion of their wages from income taxes. This can be done from wages or from deferred wages that were placed into a 403(b) denominational pension. When you retire, you may be…
Retired Ministers can still claim housing allowance
One of the best tax benefits currently available to clergy, the housing allowance, isn’t just limited to wages. Did you know that you can claim a housing allowance from your denominational pension distributions as well? When a minister retires and starts taking funds from their denominational pension, they can potentially receive the funds income-tax-free as…
Misconceptions about the Housing Allowance
The Housing Allowance is a great tax benefit available to Clergy, but it is not widely understood. Here are some common misconceptions about the Clergy Housing Allowance. 1. If I don’t spend all of the housing allowance, I will have to pay a penalty. False. The Housing Allowance is just the portion of your wages…
