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luke04larrissa
New Member

Housing allowance

What is the benefit of claiming a housing allowance for clergy work? Is it really in my benefit to have the pay the self-employment tax at the end of the year vs the standard tax that would be withheld if a housing allowance was not stated?
2 Replies
bwa
Alumni
Alumni

Housing allowance

To have a housing allowance it needs to be formally designated as such by your denomination.

You have two choices:

  • Report it as a housing allowance and pay self-employment tax.
  • Don't report it as a housing allowance and pay income tax on it (it's still taxable) and self-employment tax because it's not on your W-2.

You have no option to just not report it.  If it's not a housing allowance it's still part of your earnings and subject to income and self-employment tax.

Opus 17
Level 15

Housing allowance

Your wages are subject to regular income tax (15-25%) PLUS 15% self-employment tax.  The housing allowance is subject to self-employment tax only.  It's a huge benefit.  

See this for more http://www.ecfa.org/PDF/2016-Preparing-Tax-Returns-For-Clergy.pdf


*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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