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Continuing education for ministry leaders
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Weekly Lessons, created and written by Richard R. Hammar, J.D., LL.M., CPA, give you a basic legal overview of essential topics based on staff or volunteer positions within a church.

Previous Lessons

Week of January 19

A Strategy to Reduce Risks

This Week's LessonWeek of January 5

Checking Your Pastor's Housing Allowance

Introduction

Our lesson this week examines the topic of Checking Your Pastor's Housing Allowance. The Executive Summary provides a concise review of the key points. Before we get started, test your knowledge by completing the following quiz.

Last December a church designated a housing allowance for Pastor Craig in the amount of $15,000 for the current year. Pastor Craig incurred a few significant housing expenses during the first half of the year, and he asks the church board if it is possible to increase his housing allowance. The board members do not know how to respond.

Weekly Quiz

Instructions Click on the correct answer for each of the following questions.

Executive Summary

Ministers do not pay federal income tax on the amount of their compensation that is designated in advance by their employing church as a housing allowance, to the extent that the allowance is used to pay for housing expenses and does not exceed the fair rental value of the home (furnished, plus utilities). Sometimes ministers incur more housing expenses than they anticipated during the year, which may mean that the amount of their compensation designated as a housing allowance is not enough to cover all of their housing expenses. Often this is due to unforeseen housing expenses, or to the purchase of a new home. It is advisable for church leaders to perform a midyear check of the adequacy of their minister's housing allowance, so that any necessary adjustments can be made. A midyear check of a minister's housing allowance is the focus of this week's lesson.

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