Only housing expenses incurred while your wife was employed as a pastor (January–April) can count toward the $15,000 housing allowance reported on her W-2. Key details.
Answers to the Specific Questions:
What expenses from the year can be counted toward the $15,000? Only housing expenses incurred while employed as a pastor (January–April) can count. Eligible expenses include: Rent/mortgage payments, utilities, repairs, property taxes (prorated), homeowner’s insurance, and furnishings. See IRS Publication 517 and IRS Ministers Pay.
Can I deduct the whole portion? Not generally. Normally only expenses incurred while she was employed are eligible.
Can I deduct the prorated portion based on months employed? Yes. Expenses such as property taxes can be prorated for the period she was employed. For example, if annual property taxes are $6,000, you can count 4/12 ($2,000) for January–April.
Can I deduct only the portion mailed while she was still employed? Not normally. The mailing date doesn’t matter. Expenses are eligible based on the period they cover, not when the bill was sent.
