Who Qualifies for a Housing Allowance?

• The IRS has ruled that a regional denominational executive could not designate a portion of a state prison chaplain's salary as a housing allowance. The chaplain was an ordained minister with the Christian Church (Disciples of Christ). He excluded 45% of his wages as a housing allowance on the basis of a letter from a regional executive of the Christian Church which "endorsed" his ministry and stated that 45% of his annual salary constituted a housing allowance. The IRS noted that the income tax regulations specify that housing allowances must be declared "by the employing church or other qualified organization." It referred to a 1981 decision in which the Tax Court ruled that a federation of churches that supervised police chaplains and filled vacancies could designate a portion of a police chaplain's annual salary as a housing allowance—even though chaplain salaries were paid ...