I have a question about a ministerís housing allowance. I prepare taxes for quite a few ministers so am usually very familiar with the rules. A new client, however, has presented me with a very unusual question.

This minister recently retired and the church designated an amount for his housing allowance after retirement. So far, no problem. The problem comes when I learn that the church does not pay him any retirement income or any other type of income. Nor does any church organization.

During his working years, the church paid him extra so he could fund his own retirement through investments that he did on his own. The church has told the retired minister that he can use his housing allowance against that income.

I have never heard of this. I have had several retired ministers over the years but their retirement always came from a church or a church related organization, never through personally invested funds.

My answer to him was that he couldnít do this, but I thought it would be worthwhile to get opinions of others. I donít want to cheat him out of the benefit if he is entitled to it.

I am cross posting this on multiple boards so forgive me if you see it more than once.