Claiming the Housing Allowance During Interim Ministry

Claiming the Housing Allowance During Interim Ministry

Churches normally hire an interim minister for the time between the departure of a pastor and the calling of a new pastor or a “sabbatical interim pastor” when a pastor is granted sabbatical leave. Full-time, interim ministers are usually paid on the same scale as other full time clergy. For part-time service, the percentage of time served dictates the percent of full-time salary in addition to benefits and expenses.

You can only claim one residence for the housing allowance. The residence you claim is dependent on how long the interim assignment lasts:

      • If the interim position is expected to last for more than one year (even one day longer), the interim residence will be considered the primary residence for tax purposes from the first day in the position.
      • The housing allowance will then be based solely on housing costs at the new location and “out-of-town” living expenses will not be eligible for business expense reimbursement.
      • If the interim position continues for one year or less, then the original home continues to be the primary residence for housing allowance purposes.

Reimbursement for professional expenses should follow the IRS guidelines of an Accountable Expense Reimbursement Plan. Reimbursement for travel should be based on a monthly voucher of
total miles traveled. Because interims often commute a long distance from home, this mileage should be reimbursed, even though commuting miles may not be exempt from income tax and should be reported as taxable income. However, if the call is for one day less than one year, IRS considers the work “temporary” and the commuting miles are not considered as taxable income.

Other business expenses, including phone calls should also be reimbursed or paid directly as part of an Accountable Expense Reimbursement Plan.

Payroll Partners is committed to helping clients stay informed about payroll, tax and human resource news, developments and current events. This article is intended to provide readers with general information on these matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular practice. All efforts have been made to assure the accuracy of the information. Payroll Partners does not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular practice. If you are seeking payroll, tax and/or human resources advice, you are encouraged to consult a payroll, tax and/or human resources professional.

, ,