Clergy worksheet

[ed spencer]

Retired pastor moved to nursing home due to poor health. OK, so for the clergy worksheet.............Actual housing costs are the total nursing home payments. Right?
AND fair rental value is the same number. Right? AND Sch A medical expense is the
same number. Right? Am I double dipping? Am I all wet? Your comments would be
appreciated. Thank you, Ed

[Koss]

Nursing home

Wow, that's pretty far out...

You can't treat the same expense as a clergy housing allowance and a medical expense on Schedule A.

I haven't done a clergy return in a while. But my gut reaction is that somehow you have to break out what part of the nursing home expense is housing, and what part of it is something else, such as meals and companion care, etc.

BMK

[MAMalody]

I believe that Koss hit it on the head. Good luck sorting.

[ed spencer]

Yup, that's far out, I admit. Thank you both BMK & MAMalody. You've given me positive reinforcement...........Ed

[RitaB]

Well

You can't treat the same expense as a clergy housing allowance and a medical expense on Schedule A.BMK

Well, they do get the good old double dip on mortgage interest and property tax.

[Bees Knees]

TTB page 14-7:

Expense reduction due to tax-exempt income. A minister who
receives tax-exempt income (such as a parsonage allowance) as
part of compensation must reduce deductions for Schedule A
employee expenses and Schedule C self-employment expenses
as follows.

Tax-exempt income divided by Total ministerial income = Reduction percentage

The same reduction would also apply if the church provided a housing allowance and nursing home expenses paid by the taxpayer were used to justify excluding the housing allowance from taxable income. The percentage of income excluded from tax must be used to reduce the medical expense deduction on Schedule A.

[MAMalody]

Are you saying that all pastors that have medical expenses would have to reduce their amount similar to what they do for professional expenses?

[Bees Knees]

Are you saying that all pastors that have medical expenses would have to reduce their amount similar to what they do for professional expenses?

No, only if such medical expenses were used as a basis for the housing allowance exclusion. You can't deduct expenses that are allocable to tax-exempt housing allowance income.

§ 265(a) General rule
No deduction shall be allowed for—

§ 265(a)(1) Expenses

Any amount otherwise allowable as a deduction which is allocable to one or more classes of income other than interest (whether or not any amount of income of that class or classes is received or accrued) wholly exempt from the taxes imposed by this subtitle,

The above is the code section that disallows deductions for professional expenses on Schedule A that are allocable to the receipt of tax-exempt housing allowance income. Nothing is said in that code section that limits it to professional expenses. The same principal would thus apply to any other expense that is directly allocable to the receipt of tax-exempt income.

[taxea]

Do retired clergy get a housing allowance? Is he in a nursing home and still working in his field? Wow.

[JohnH]

Yes, Retired clergy are allowed to request designation of all or part of their pension payments as Housing & UtilitIes allowance, subject to the same limitations as actively employed clergy.