topic Can I claim both my housing allowance and a standard deduction on my returns? in Deductions & credits

Can I claim both my housing allowance and a standard deduction on my returns?

cdtm2019 — Wed, 09 Dec 2020 19:55:15 GMT

Re: Can I claim both my housing allowance and a standard deduction on my returns?

xmasbaby0 — Wed, 09 Dec 2020 21:06:16 GMT

What housing allowance are you referring to? The software automatically uses your standard deduction unless you enter enough itemized deductions to exceed your standard deduction.

Re: Can I claim both my housing allowance and a standard deduction on my returns?

Opus 17 — Wed, 09 Dec 2020 22:22:35 GMT

If you are clergy and receive a tax-free housing allowance (it is subject to self-employment tax but excluded from income tax);

then you are still allowed to take the standard deduction or to itemize your deductions on schedule A and deduct mortgage interest. (It sounds like double-dipping but it's allowed.)

This assumes your housing allowance is reported correctly. Your housing allowance needs to be documented in advance and in writing by your church finance board, and it must be excluded from your W-2 wages -- not listed as taxable income at all. There is no way for clergy to deduct housing expenses from their income, the housing allowance is excluded from income before it is reported, which is very different.

Re: Can I claim both my housing allowance and a standard deduction on my returns?

saguzzi — Thu, 02 Feb 2023 16:59:25 GMT

Hello, thank you for this response. Just to clarify, a pastor may take both the standard deduction and also itemize their mortgage interest? If so, is this accounted for in common tax software such as intuit and tax act? Thank you!

Re: Can I claim both my housing allowance and a standard deduction on my returns?

Opus 17 — Thu, 02 Feb 2023 17:07:42 GMT

@saguzzi

That’s not what the answer says. You can take the standard deduction, or the itemized deduction, but not both.

If you have a properly constructed clergy housing allowance, and if you itemize your deductions, you can list your mortgage interest as an itemized deduction, even though you paid your mortgage from the non-taxable housing allowance.

Re: Can I claim both my housing allowance and a standard deduction on my returns?

Vanessa A — Thu, 02 Feb 2023 17:12:24 GMT

No, you cannot take the standard deduction and itemize your mortgage interest. You can take either the standard deduction or itemize your mortgage interest in addition to taking the housing allowance. The housing allowance is separate from itemizing or the standard deduction.

Re: Can I claim both my housing allowance and a standard deduction on my returns?

saguzzi — Thu, 02 Feb 2023 17:47:16 GMT

Now I understand and this makes sense. I appreciate the response from both you and Vanessa. Thank you!