Question

I have a question about reporting clergy housing allowance on my taxes. If I’m a member of the clergy, how does my housing allowance figure into my income?

Answer

Regarding reporting clergy housing allowance, you can exclude the allowance (W-2, Box 14) from gross income. You can do so to the extent you use it to pay expenses in providing a home. Usually, those expenses include:

  • Rent
  • Mortgage payments
  • Utilities
  • Repairs
  • Other expenses directly related to providing a home

The amount excluded can’t be more than the reasonable pay for the minister’s services.

Your employer must designate the housing allowance as such before paying it to you.

The exclusion doesn’t apply for self-employment tax purposes. This means that these are subject to self-employment tax on Schedule SE, less your employee business expenses:

  • Your salary on your W-2
  • Net profit on Schedule C or C-EZ
  • Your housing allowance

If you’re retired, your net earnings from self-employment don’t include the rental value of the parsonage. This is true even if the rental value is excluded from gross income. So, it’s not considered earned income for the Earned Income Credit (EIC).

Related Topics

Related Resources

Taxes on Prize Winnings and More!

When you come into surprise money, you have to pay taxes on prize money. Learn more with the tax experts at H&R Block.

Calculate Cost Basis For Stock Options

What should you know before you calculate the cost basis of stocks for tax purposes? Learn more from the tax experts at H&R Block.

Taxable and Tax Exempt Interest Income

Learn more about interest income and whether is qualifies as taxable or tax exempt interest income from the tax experts at H&R Block.

Taxable And Tax Free Sources Of Income

Learn about the different sources of income and determine which ones are taxable and which are tax-free from the experts at H&R Block.