The clergy housing allowance provides a way for licensed, commissioned, or ordained ministers to exclude a portion of their income from federal tax requirements (but not self-employment taxes).
Each year, clergy should be given the opportunity to update their housing allowance amounts for the following calendar year.
Requests must be approved by the governing body (elders, trustees, etc.) or a representative before being paid and cannot be retroactive.
No one is required to update their housing amount, and housing can be updated anytime throughout the year, but to avoid confusion and the risk of errors, housing allowance requests should be submitted before the first payroll of the year. Editable forms are available for use below.
In calculating the housing allowance amount, clergy should determine how much they need to spend on housing costs (see worksheet). However, keep in mind that the excludable amount on your tax return will be the lesser of:
- Your actual, qualified expenses,
- The amount you designate on your request form,
- The fair market value of your primary residence as a furnished rental with utility costs.
Clergy should plan ahead if they intend to buy a new house, refinance, or complete major repairs or renovations.
Housing Allowance Worksheet (Editable)
Housing Allowance Request Form (Editable)
IRS Publication 517 (Informational)
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