• Who is Eligible for a Housing Allowance?
  According to the IRS definition, clergy who are duly ordained, commissioned, or licensed by a recognized religious body constituting a church or church denomination.

• Does the Church Have to Approve It?
  Housing allowances for a qualifying religious organization must be designated in advance, clearly defined, and specified before they are paid. They cannot be applied retroactively; thus, they must be established before the start of the calendar year.

• How Much of a Minister’s Income Can Be Designated as Housing Allowance?
  While the tax code does not specify a percentage or dollar limit, the allowance must be proportionate to the services rendered and considered “reasonable compensation” by the IRS to qualify for tax benefits.

• What Can Be Included in a Housing Allowance?
  A housing allowance may cover renting, purchasing (including down payments or mortgage payments), furnishing, and maintaining their primary home.

• How Do You Account for a Housing Allowance on a W2?
  The housing allowance is reported in Box 14 of Form W-2. However, the portion paid as a housing allowance is not included in Box 1 of the W-2.

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Clergy Financial Resources
Tax I Payroll I Bookkeeping I HR | Consulting
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421.0101
Fax: (888) 876.5101

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com