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. the fair market rental value of the home (including furnishings, utilities, garage, etc.).

Is housing allowance a deduction?

The housing allowance is an exclusion from income permitted by Section 107 of the Internal Revenue Code. It is not a deduction. In other words, a housing allowance is money that is not reported as income. A housing allowance is never deducted because it is never reported as income in the first place.

Is the clergy housing allowance excluded from income?

A housing allowance is a portion of clergy income that may be excluded from income for federal income tax purposes (W-2 “Box 1” wages) under Section 107 of the Internal Revenue Code. To

What kind of tax do you pay on a clergy salary?

This means that your salary on Form W-2, Wage and Tax Statement, the net profit on Schedule C, and your housing allowance less pertinent deductible expenses are subject to self-employment tax on Schedule SE (Form 1040), Self-Employment Tax.

How does an ordained minister get a housing allowance?

Housing Allowance A licensed, commissioned, or ordained minister who performs ministerial services as an employee may be able to exclude from gross 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.

How is housing allowance reported on income tax?

Non-accountable Plan: Any reimbursements made outside of an accountable plan are reported on form W-2 as wages and are taxable. The housing allowance must be an officially designated, specific amount. It is not considered income for income tax purposes.