What is a housing allowance for a pastor?
A parsonage allowance is a sum of money awarded by the same governing board of a house of worship to its minister to offset housing expenses. For tax purposes, this allowance is exempted from the recipient’s gross income. 1 A parsonage allowance may also be called a rental allowance or housing allowance.
What are qualified housing expenses for clergy?
Generally, those expenses include rent, mortgage interest, utilities, and other expenses directly relating to providing a home. The amount excluded can’t be more than reasonable compensation for the minister’s services. If you own your home, you may still claim deductions for mortgage interest and real property taxes.
What deductions can a pastor claim?
Any unreimbursed business expenses a minister incurs, such as automobile expenses, professional dues, and publications, are deductible in full (except for the 50% reduction for meals and entertainment) 30 from self-employment income, even though these expenses are not deductible in full in calculating taxable income.
Is a pastor’s housing allowance taxable?
A minister’s housing allowance (sometimes called a parsonage allowance or a rental allowance) is excludable from gross income for income tax purposes but not for self-employment tax purposes.
Are housing allowances for clergy taxable?
What is the clergy housing allowance?
If you live in your own home, the IRS rules state that your clergy housing allowance is the lowest of the: If you live in church-provided housing, the housing allowance is the fair market rental value of the church-provided housing, furnished plus utilities.
Can a minister claim Housing Allowance?
Housing Allowance. A licensed, commissioned, or ordained minister who performs ministerial services as an employee may be able to exclude from income the fair rental value of a home provided as part of compensation (a parsonage) or a housing allowance provided as compensation if it is used to rent or otherwise provide a home.
Are clerics allowed to exclude housing allowance from federal income tax?
As a cleric, you are allowed to exclude your housing allowance from federal income tax. In other words, your taxable income is reduced by the permitted amount of the allowance.
Do pastors pay taxes on their housing expenses?
The ministerial housing allowance is the biggest tax benefit available to pastors. It allows you to exclude your housing costs from gross income for your federal income taxes. Thus, all of your housing expenses, from your mortgage payments to your light bulbs, are income tax-free.