10 May Is there a standard amount for housing allowance for pastors?
There are no standard amounts for housing allowance as a whole. The IRS guidelines say to use the fair market rental value of your housing and housing expenses (i.e., gas, electric, cable, etc.). There are housing allowance worksheets to help pastors figure out the best amounts for their individual needs.
Here is what you need to know about housing allowance
- Housing allowance amount is usually picked by the minister from their total pay. For example, if they make 70K they can say that they want 35K of that paid as housing.
- They need to fill out a housing allowance form which is then approved and noted by the board each year and stored in their personnel file.
- Housing can not be retroactive–this is why it is essential forms are done before the new year or new fiscal year.
- It is better to overestimate than underestimate. If a minister has more write-offs than housing allowance, they’re out of luck, but if they have more housing allowance than write-offs, they simply pay the difference when filing their taxes.
- Some ministers will take their entire salary as housing to avoid missing out on any money, then deal with any extra income when they do their taxes. Just keep in mind not to designate an “excessive” amount.
- Housing allowance is exempt from federal and state taxes but NOT social security or Medicare (FICA)
Original content by HR Ministry Solutions. 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.