Clergy Housing Allowance Answers
If you’re puzzled about some aspect of your housing allowance or clergy tax situation you are not alone. Find all that you should know about one of your greatest tax advantages, Housing Allowance, in a free, concise video, “Ministers Housing Allowance.”
In the mean time, here are a few of the top questions we get about housing allowance:
How much housing allowance can I claim on my tax return in a given year?
The clergy tax code imposes three limitations here. Ministers may only claim the lower of these three:
(1) the amount of the housing allowance designated by the church.
(2) the fair rental value of the minister’s furnished home, plus utilities.
(3) the amount spent that year to buy, rent, furnish, improve and maintain the primary residence.
A real estate agent can be helpful in figuring out the fair rental value of an unfurnished home but that’s the first half of the equation. We discuss these issues, along with what qualifies as a housing allowance deduction and how to handle them in our “Tax Free Money for Minister’s” video, as well.
When can I change my housing allowance limits?
The Housing Allowance designation can be changed or amended anytime throughout the year but, never retro-actively. This means that the new designation applies only to the money remaining to be paid for that year. If you anticipate extra costs in the months ahead for a home purchase, repair, addition, etc. adjust your housing allowance designation before you incur the expense.
How much can my employer designate for housing allowance?
We can’t be more emphatic about this; The Tax Code Regulations and Rulings impose NO LIMITS on housing allowance designations except those listed in the first section. You may even designate the entire amount of your salary as housing allowance, if necessary, and is often very appropriate to do so. In some cases, including part-time ministry, semi-retired ministers, particularly high housing costs it may be advisable for 100% of a ministers salary to be designated as housing allowance.
Contact Us anytime for specific answers to your questions.