Q&A: Can a Pastor Set Up a Housing Allowance on Two Payrolls?

Such an arrangement can happen when neither revenue stream is enough to cover all of a minister’s housing expenses.

If a pastor is receiving payment from more than one payroll, can he set up a housing allowance on both payrolls he gets paid from? Our tax attorney is giving us a green light that we could have more than one housing allowance set up, but we wanted to also seek your advice as well.

It is permissible for a minister to receive a housing allowance from two revenue sources. This often happens when neither revenue stream is large enough to cover all of a minister’s housing expenses. All that is required for a housing allowance to be excludable in computing income taxes is that it constitutes compensation for the performance of ministerial service by a credentialed minister.
Note, however, that the combined housing allowances are nontaxable only if (1) they are used to pay housing expenses, and (2) do not exceed the annual fair rental value of the minster’s home (furnished, plus utilities).
For more help with clergy housing allowances, see chapter 6 of the Church & Clergy Tax Guide.
Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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