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, but it requires some work. One of the requirements of the housing allowance is proactive designation. You can never designate the housing allowance retroactively, or for pay that has already been received. In order to use the housing allowance, you must designate it BEFORE you are paid. In the case of the minister working for pulpit supply or traveling evangelist, it means that they will need to get a designation of the housing allowance in writing before they receive payment.
Make sure to keep a copy of the written designation, as IRS would ask for this document if your housing allowance ever gets audited. Properly designating a housing allowance could save you hundreds or thousands of dollars on your tax return.
Do you have additional questions about clergy allowances? Clergy Financial Resources offers Pro Advisor support for one-off questions. Visit our website at https://www.clergytaxnet.com/resources/proadvisor/ for more information about scheduling a Pro Advisor session today!
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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