The Tax Court issues an important decision—Haimowitz v. Commissioner, T.C. Memo. 1997-40 (1997) [See also Legal Definitions of a Minister, Ministers' Housing and Parsonage Allowances]

Article summary. The Tax Court recently addressed the issue of whether an administrator of a Jewish synagogue qualified for a housing allowance. The Court ruled that the administrator did not qualify since he was not ordained, commissioned, or licensed, and there was no evidence that a housing allowance had been properly designated. This feature article reviews the Court's decision and addresses its relevance to other religious workers.

The tax code contains a number of special provisions that apply to "ordained, commissioned, or licensed ministers." One of those special provisions is the housing allowance. Stated simply, a portion of a minister's compensation that is designated in advance by an employing church as a housing allowance is excluded from taxable income for income tax reporting purposes, to the extent it is used for housing expenses and does not exceed the fair rental value of the home (furnished, including utilities). This is one of the most significant tax benefits available to ministers.