I have heard discussion suggesting that in some cases retirement income for ministers is exempt from tax. Specifically a minister in MN receives a supplemental retirement income of $2000 per month based on contributions through his ministerial sponsor. $1500 is designated as retirement housing allowance. TT deducted the designated housing allowance and charged SECA and reported taxable earned income (self-employment) only on the remaining $500/month. No income tax or SECA was charged on the designated housing allowance.
Please help me understand the basis of what ministerial income in retirement is subject to SECA, what is subject to income tax, and what is not.
[There is some discussion online as to whether the minister is really retired. This minister is. While he continues to do ministry, it is as a volunteer with no required duties, and the supplemental income is completely unrelated to any current activity on his part in retirement. He does however have incidental expenses related to his ministry in retirement, such as ministry travel, office supplies and services, and printing for materials he distributes.]
