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Q&A: Adjusting a Pastor’s Housing Allowance

Adjusting a pastor’s housing allowance when expenses are less than the amount previously approved.

Frank Sommerville, Attorney, CPA
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Q: If a pastor moves to a temporary housing situation and the housing expenses are lower than the approved housing allowance, does the board need to adjust the amount of his housing allowance designation?

No adjustment is needed. The board is not required to make any changes to the amount designated as housing allowance even if the minister’s housing situation changes. The pastor simply reports the excess housing allowance as taxable income on his Form 1040. The church is not responsible for the proper tax treatment of the housing allowance on the minister’s tax return. If the church wants to adjust the amount of the housing allowance (either up or down), it is free to do so at any time as long as the adjustment is effective prospectively and the board approves the official change to the housing allowance designation.

Frank Sommerville is a both a CPA and attorney, and a longtime 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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