Ep 55 ~ Housing Designation and Retirement

Direct from the IRS website:


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.


If you receive as part of your salary (for services as a
minister) an amount officially designated (in advance of payment)
as a housing allowance, and the amount isn’t more than reasonable
pay for your services, you can exclude from gross income the
lesser of the following amounts:


the amount officially designated (in advance of payment) as a
housing allowance;

the amount actually used to provide or rent a home; or

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



The payments officially designated as a housing allowance must be
used in the year received.


Include any amount of the allowance that you can't exclude as
wages on line 1a of Form 1040, U.S. Individual Income Tax
Return or Form 1040-SR, U.S. Tax Return for Seniors.
Enter “Excess allowance” and the amount on the dotted line next
to line 1a.


If your congregation furnishes housing in kind as pay for your
services as a minister instead of a housing allowance, you may
exclude the fair market rental value of the housing from income,
but you must include the fair market rental value of the housing
in net earnings from self-employment for self-employment tax
purposes.


For more information on a minister’s housing allowance, refer
to Publication 517, Social Security and Other Information
for Members of the Clergy and Religious Workers.


For information on earnings for clergy and reporting of
self-employment tax, refer to Tax Topic 417, Earnings
for Clergy.
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