Expenses Against Housing Allowance

[Snaggletooth]

I have a client with a very large housing allowance. Am interested in what expenses can be taken to reduce self-employment income.

Please focus on what can actually be deducted, instead of what expenses give rise to justify the housing allowance.

[Unless of course the expenses can be deducted too]

[Burke]

As far as I know, the only expenses which can be deducted to reduce the HSA subject to SE taxes are out-of-pocket business expenses incurred by the clergy for which he is not reimbursed. This would be the same type of expenses which most any employee can deduct, such as supplies, equipment, mileage, etc. If the clergy receives direct payments from marriages, baptisms, etc, of course, those related expenses would go on Sche C where the income is reported. Otherwise, unreimbursed employee expenses go on a clergy worksheet in my software (ATX) to calculate the adjustment to the HSA for SE tax. Pub 517 mentions this deduction, but does not give details as to the individual expenses allowable.

[DonB]

I have a client with a very large housing allowance. Am interested in what expenses can be taken to reduce self-employment income.

Please focus on what can actually be deducted, instead of what expenses give rise to justify the housing allowance.

[Unless of course the expenses can be deducted too]

A minister's housing allowance is 100% subject to SE tax and there is no way to reduce the SE tax. The excess (reduced) housing allowance is added to wages which are subject to SE tax. The housing allowance is not subject to the income tax and it can not exceed actual housing expenses or the fair rental value which ever is lower.