Not sure why you have a housing allowance listed as 10% of the FMV. You are paying way too much IRS tax.
Every year a clergy person must get the allowance stated in letter prior to the first pay check of the year---should be in the year (December) prior.
It isn't unusual for the allowance to be nearly half of the total monthly paycheck. FMV also includes more than just the rental value...research the items. Essentially treat the value as a FURNISHED rental and look at what expenses a landlord would expect to spend a year. We included utilities and monthly landscape expenses (when we had them) and any replacement of furniture and other expected maintenance costs such as the backflow tests for sprinkling systems. Just remember that if you exceed the allowance letter amount, it's no longer deductible against the allowance.
In 25 yrs of ministry, the beginning experiences with FMV were met with trepidation and shifted much more to an aggressive approach. If audited have the records and have the auditor prove a disallowance in the regulations.
audited
Of course if captured or audited the secretary will disavow any responsibility for the above missive as being from a tax expert or licenced authority.
