Transcript Housing Allowance: What You Need to Know The Better Way… Planning Financial Support Why is planning financial support important? • To ensure church funds.

Housing Allowance:
What You Need to Know
The Better Way…
Planning Financial Support
Why is planning financial support important?
• To ensure church funds are
spent appropriately
• To clarify true personal income
• To extend the tenure of church employees
Determining a
“Minister for Tax Purposes”
• Is the person ordained, licensed
or commissioned?
• Does the person administer ordinances?
• Does the person conduct
religious worship?
• Does the person have management
responsibilities in the church?
• Is the person considered to be a religious
leader by the church?
Housing Allowance
If You Own or Rent
The maximum amount eligible for exclusion
is the lesser of:
• The designated amount
• The actual eligible expenses
• The fair rental value of the home
including furnishings plus utilities
Housing Allowance
If You Live in a Parsonage
The maximum amount you can exclude is
the lesser of:
• The designated amount
• The actual eligible expenses
Housing Allowance
• For eligible ministers
(IRS Code Section 107)
• Designated in advance by the church
• Non-taxable for federal income taxes only,
subject to limits
• Social Security taxes (SECA) payable on
the fair rental value of a parsonage and on
the housing allowance
Housing Allowance
Actual Eligible Expenses
• Mortgage or rent and Home Owers Assoc.
• Utilities
• Property taxes
• Insurance
• Furnishings
• Repairs and improvements
How to Designate a
Housing Allowance
• Minister provides church an estimate of
anticipated housing expenses
(form on our website)
• Church officially designates and
documents housing allowance in advance
• Action recorded in church minutes and
minister is notified
How to Designate a
Housing Allowance
• Housing allowance may be changed
prospectively during the year
• You must change your HA before you pay
for repair bill
• Minister is responsible for documenting
expenses
Tax Issues for the Minister
•When you are doing your resolutions for your
housing allowance, add to it “until changed.”
•Keeps your housing allowance in effect until
you change it again.
•You lose your housing allowance if your form
says for 2010 and you go into 2011 without it
being renewed.
•Keep good records. No proof, no write off
Step 10: W-2 Preparation
HSA
Step 10: W-2 Preparation
Tax Issues for the Minister
•Mortgage interest and property taxes can be
deducted twice – once as housing allowance
and then as Schedule A itemized deductions
®
Rod Wiltrout
GuideStone Representative
[email protected]
(559) 256-0858 direct line
(559) 287-7840 cell phone