Retired Clergy

[spencer]

OK, no comments on the earlier post. I'll rephrase the question (I really need help here). Clergy pay usually includes some kind of housing allowance. The allowance (or actual expenses or fair markeet rent) is not taxable but the total package is subject to SE. 2106 and Sch C expenses must be reduced----because a % of the income is not taxed so a like % of the expenses are not allowed. My question is, for a retired clergy, on pension, no church W-2----can full expenses be taken against C income or does the % reduction still apply? Help! Thanks!

[WhiteOleander]

There is a member here who is an expert on clergy issues. He has helped me several times. His name is MAMalody.

You can email him. He responded to a thread below. The thread is titled "Mission Work Foreign Country". You can click on his name and email him from there. HTH

[thomtax]

OK, no comments on the earlier post. I'll rephrase the question (I really need help here). Clergy pay usually includes some kind of housing allowance. The allowance (or actual expenses or fair markeet rent) is not taxable but the total package is subject to SE. 2106 and Sch C expenses must be reduced----because a % of the income is not taxed so a like % of the expenses are not allowed. My question is, for a retired clergy, on pension, no church W-2----can full expenses be taken against C income or does the % reduction still apply? Help! Thanks!

You need to check with the pastor about the retirement pay. I have some whose entire retirement benefits have been designated as housing allowance, but since it is not "employment earnings" there is no SE tax involved with it. The retirement benefits are being paid by the SBC annuity and retirement group ( I can't remember the name they are going by right now).

LT

[spencer]

Thank you much

I'll follow up on that

[spencer]

Yup, it's

all housing allowance. He does still do some Sch C services and I'm hoping the applicable expenses are not limited

[MAMalody]

The Deason Rule only applies to expenses incurred that are attributable to earned income. Therefore, if you receive a housing allowance as part of a retirement plan from your church because of services rendered in the past, that has nothing to do with current income and expenses. Accordingly, interim pastoral work or pulpit supply income will only trigger the Deason Rule if the churches paying for those services designate all or a portion of what they pay as housing allowance. The retirement housing allowance payments from the church that pays them pursuant to a retirement plan will not have any affect on the deductibility of the expenses.

I hope this helps.

Mike