The ministers' housing allowance is a very important tax benefit available to ministers. Section 107 of the Internal Revenue Code allows "ministers of the gospel" to exclude some or all of their ministerial income designated by their church or church-related employer as a housing allowance from income for federal income tax purposes.
Only Ministers for Tax Purposes are eligible for a housing allowance on their ministerial earnings. Church custodians, secretaries and ministerial staff who are not Ministers for Tax Purposes are not eligible for a housing allowance.
A church may call someone a minister, but the IRS may not treat that person as a Minister for Tax Purposes — that depends on individual facts and circumstances. The IRS will consider most ordained ministers to be Ministers for Tax Purposes and therefore eligible for a housing allowance on their ministerial income. Licensed and commissioned ministers are less likely to be treated as Ministers for Tax Purposes by the IRS, but it depends on their individual facts and circumstances.
Eligible expenses include mortgage payments (principal and interest); rent payments; real estate taxes; property insurance; utilities (gas, electricity, water, sewer, garbage pickup, local telephone service); appliances and furniture (purchase or rental cost and repairs); remodeling expenses; homeowners’ dues; and pest control.
Ready to save on your taxes?
Schedule a one-on-one session with Scott Larsen now for a FREE review!
How will the 2018 Tax Cuts and Jobs Act affect you? Use this form to calculate your housing allowance!
Must be logged in!