pastor housing allowance
The Minister’s Compensation & HousingAllowance, better known simply as the housingallowance, is for both active and retired pastors alike to set aside a portion of their income as tax-free. How to Calculate Your HousingAllowance. When determining how much can be excluded from federal income tax, pastors must use the lowest of three amounts The housingallowance provides an excellent benefit for pastors and their families to offset the cost of living expenses.
Understanding the Context
A housingallowance cannot be added in hindsight, nor can it exceed your "fair pay" for work as a pastor. For example, let's say the fair pay for your pastoral services is $3,000 per month. Housingallowances must be designated in advance. Retroactive designations are not valid.
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Key Insights
First, the IRS looks at the pastorhousingallowance income as an exclusion from income. Therefore housingallowance is not reported as taxable income on the personal tax returns. In this article, we’ll break down how minister compensation works, especially the housingallowance portion, and walk you through how to set it up in a way that protects both your pastor and...
