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Q&A: Is My Housing Allowance Considered "Earned" Income?

Guidance for a retired pastor who works for the church part time.

Last Reviewed: November 18, 2021
Q&A: Is My Housing Allowance Considered "Earned" Income?
Image: KenTannenbaum | Getty

The Church & Clergy Tax Guide says that a pastoral housing allowance is not subject to Social Security tax if the minister receiving it is retired. I am retired, but I am paid a housing allowance while serving part time as associate pastor in my church. Do I qualify for not paying Social Security taxes?

Social Security applies to earned income, regardless of the age of the worker. In this case, since you are currently working to earn the housing allowance, it is subject to the Social Security (self-employment taxes).

If a minister is performing no services (this really means zero services) and receives a payment from a retirement plan operated by a church, amounts designated as a housing allowance are not considered "earned" income and, therefore, are not subject to Social Security taxes.

Frank Sommerville is an attorney and shareholder in the law firm of Weycer, Kaplan, Pulaski & Zuber, P. C. in Houston and Dallas, Texas, and an Editorial Advisor for Church Law & Tax.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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Posted:
  • December 21, 2015
  • Last Reviewed: November 18, 2021

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