Clergy

[Gary]

I have a minister that has no church income but does have the housing allowance form from the church, on which he pays social security?

Is this reasonable?

Gary

[RLymanC]

Parsonage

It's not unusual for minister to receive 100% percent income as parsonage allowance. If he has opted out of social security it's all tax free.

[Gary]

Thanks

for the response.

[Grumpy]

It's not necessarily all tax free even if he/she has opted out of the SE system via an approved Form 4361. The amount that is tax free is the lesser of the amount designated as housing allowance, the amount actually spent, or the fair rental value of the housing.

[AZ-Tax]

Church owns house.....

What if the church owns the house the clergy is residing in and the church does not charge the clergy rent?

Does the clergy need to report fair market value of what it would normally cost to rent his particular house the clergy is living in?

[Grumpy]

What if the church owns the house the clergy is residing in and the church does not charge the clergy rent?

Does the clergy need to report fair market value of what it would normally cost to rent his particular house the clergy is living in?

He/she needs to report the fair rental value as income subject to Self Employment tax (assuming he/she does not have an approved Form 4361), but not sunject to income tax.