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over taxed citizen
Returning Member

MANSE Allowance

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. 

7 Replies
Mike9241
Level 15

MANSE Allowance

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

 

Opus 17
Level 15

MANSE Allowance

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,

https://go.efca.org/resources/document/preparing-tax-returns-clergy

 

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. 

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

MANSE Allowance

My wife qualified for the MANCE/Parsonage allowance in the middle of the year. Will we be given a credit for the remainder of the year?  For example if we qualify for 26K in exemption and only get to use 13K from when her work filed and the end of the year. Will the additional 13K in exemption be earned through the tax return process? Or are we just out of luck on this?

 

Will I need to utilize a tax expert to file or will turbo tax be sufficient through its self reporting system. 

Opus 17
Level 15

MANSE Allowance

@over taxed citizen 

There are no additional tax breaks for clergy housing. Remember that housing allowance must be declared in advance and in writing by the church.  Suppose the church designated $1000 per month of your spouse‘s salary as a housing allowance effective July 1, 2021.  She would have a $6000 housing allowance for the year and could declare up to $6000 of qualified housing expenses against the housing allowance.  There are no additional tax breaks for housing expenses that were more than the designated housing allowance.

 

TurboTax can prepare a tax return for a member of the clergy with a housing allowance.

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

MANSE Allowance

I am a chaplain employed by the state of Maryland.  Where do I enter the parsonage allowance on the SR-1040?  Last year I entered it on line 8 of Schedule 1.  This year it does not allow me to do that.  When attempting to put it in the W-2 section of the 1040, it does not allow me to enter a number less than 0.  Thank you in advance for your help in this matter.

AnnetteB6
Expert Alumni

MANSE Allowance

Take a look at the following TurboTax help article for steps to enter your parsonage allowance:

 

How do I enter a parsonage or housing allowance reported on a W-2?

 

@tbhoye

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Opus 17
Level 15

MANSE Allowance


@tbhoye wrote:

I am a chaplain employed by the state of Maryland.  Where do I enter the parsonage allowance on the SR-1040?  Last year I entered it on line 8 of Schedule 1.  This year it does not allow me to do that.  When attempting to put it in the W-2 section of the 1040, it does not allow me to enter a number less than 0.  Thank you in advance for your help in this matter.


A parsonage allowance is not subject to income tax, only self-employment tax.  Why did you pay income tax on your parsonage allowance last year?  You did it backwards, you paid income tax but not self-employment tax. 

 

You may want to file an amended 2020 return.  You may need a lot more education on your tax position as well.

 

These are good guide books.

https://www.ecfa.church/TaxBooks/Default.aspx

*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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