Clergy housing allowance counts as income for FAFSA purposes. According to IRS guidelines, while the housing allowance is excludable from gross income for income tax purposes, it is not excludable for self-employment tax purposes. This means that the housing allowance must be included for the Free Application for Federal Student Aid (FAFSA), which considers both taxable and untaxed income.

The FAFSA form requires reporting of all income, including untaxed income such as housing allowances. Specifically, the FAFSA instructions state that clergy housing allowances should be reported as untaxed income. This aligns with the IRS treatment of the housing allowance for self-employment tax purposes, where it is included in net earnings from self-employment.

Therefore, when completing the FAFSA, you should include the clergy housing allowance as part of your income. This ensures that the financial aid determination accurately reflects your total financial resources.

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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

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