I was ordained this year as a clergy member with a new, very small church and we are trying to determine how to set up taxes. The church is unable to set aside any of its budget for clergy salaries, but would like me to benefit from the housing allowance as my compensation in lieu of a salary. I work a secular job as a regular employee for my income, but I would like to be able to benefit from the housing allowance from the church if possible as I'm giving a significant portion of my time in providing clergy services. Does the church have to actually PAY the housing allowance, or is the amount stated in writing by the board of the church to be used by me as a deduction on my total income taxes (income which will all be from my secular job)? I'm confused about how this is treated by the IRS - is the housing allowance a deduction from my taxable income or is it only allowed to be taken out of actual money that has been paid to me by the church (nothing for the forseeable future)?
