My wife will qualify for a MANCE allowance starting this year. I have a couple of questions about this.
Will we be able to file jointly?
Her deduction exceeds her income, will I get to use the remainder?
Can the MANCE deduction be used on investment income?
Any help on this would be great.
Parsonage / Manse: A parsonage/manse allowance paid to you as part of your salary is not income to the extent you use it, in the year received, to maintain and furnish a parsonage/manse. The church or organization that employs you must officially designate the payment as a parsonage/manse allowance before the payment is made. A definite amount must be designated; the amount of the parsonage/manse allowance cannot be determined at a later date. If no part has been officially designated, you must include your total salary in your income. The major tax break granted to members of the clergy is the income exclusion for rental value of parsonages. Ministers may totally exclude the value of a parsonage that is provided them in kind by the congregation. But, where a cash, parsonage, or manse allowance is paid, a minister must include in income the amount that he has not used during the tax year to pay rent or otherwise maintain and furnish a home. Fair rental value of the parsonage, utilities paid by the church, parsonage, utilities, and furnishing allowance is subject to social security tax. If housing is provided to you by your congregation, the parsonage or manse exclusion cannot be more than what is reasonable pay for your services, and is limited to the fair market rental value (including furnishings, utilities, garage, etc.) of the home. This FRV limitation generally does not come into play when a home is provided.
jointly - yes
IF you are talking about a parsonage allowance for a pastor or minister, this income is subject to self-employment income, but is not subject to income tax, up to the actual cost of housing. For example, if your actual cost of housing is $15,000 but the housing allowance is $18,000, the remaining amount is added back to taxable income. On the other hand, if actual housing expenses are $18,000 and the parsonage allowance is $15,000, only the $15,000 can be excluded from income and there are no deductions for the other "unused" $3000 of housing expenses.
There are a lot of other rules, pastors should read this,
A pastor with a housing allowance can certainly file a joint return.
If you are talking about something else, we need to know more details, we don't recognize whatever you are talking about.