I have a church who is paying one of its ministers a housing allowance. However, he is living in the church parsonage. Is this normal?
-
-
It sure is normal. Just make sure all the rules are followed, that is, this cash amount is designated ahead of time.
Many churches do this because the pastor may be paying utilities and other household expenses and they are trying to make sure his salary covers this and that he gets the best tax advantage possible. -
Yes, it's designated by the board each year. But he is not paying anything that I am aware of. Church pays all utilities and expenses of home.Comment
-
That is still okay. Just handle it like a normal housing allowance, after all, that is what it is. I may see this more than you do because my business is limited exclusively to clergy and religious workers - I do no other returns.Comment
-
Next question: in the case of FMV rental value of the parsonage where no housing allowance is actually paid in cash, does this have to be designated also ahead of time?
And in the previous case, if his expenses do not equal or exceed the housing allowance actually paid, then it is income to him when he files his personal return?Comment
-
The minister living in a church owned parsonage has two pieces to his parsonage (housing) allowance:
1. a value provided, and
2. a designated portion of his cash salary for additional home expenses.
These both must meet the designation rules to be considered a qualified housing allowance.Comment
Comment