The Housing Allowance Exclusion permits clergy to set aside a portion of their compensation specifically for housing expenses, shielding that amount from federal income tax. By reducing taxable income, clergy can significantly lower their overall tax burden. Although this exclusion is one of the most valuable tax advantages available to ministers, it is also one of the most commonly misunderstood and misapplied.
This Housing Allowance Guide covers:
- Housing Allowance Eligibility
- Types of Allowances
- Qualified Housing Expenses
- Non‑Qualified Expenses
- How to Substantiate Housing Expenses
- Designating a Housing Allowance
- How to designate part of your salary as a housing allowance
- How to amend an existing housing allowance
- Rules and limitations on how often or when changes can be made
Housing Allowance Limitations
- Determining Fair Rental Value
- What “Fair Rental Value” means
- How to calculate the fair rental value of your home
Original content by clergyfinancial.com. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.
