Housing Allowance:
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Transcript of Housing Allowance:
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Housing Allowance:
What You Need to Know
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The Better Way…Planning Financial SupportWhy is planning financial support important? • To ensure church funds are
spent appropriately• To clarify true personal income• To extend the tenure of church employees
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Determining a“Minister for Tax Purposes”• Is the person ordained, licensed
or commissioned?• Does the person administer ordinances?• Does the person conduct
religious worship?• Does the person have management
responsibilities in the church?• Is the person considered to be a religious
leader by the church?
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Housing Allowance If You Own or RentThe maximum amount eligible for exclusion is the lesser of:• The designated amount• The actual eligible expenses• The fair rental value of the home
including furnishings plus utilities
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Housing Allowance If You Live in a ParsonageThe maximum amount you can exclude isthe lesser of:• The designated amount• The actual eligible expenses
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Housing Allowance
• For eligible ministers (IRS Code Section 107)
• Designated in advance by the church• Non-taxable for federal income taxes only,
subject to limits• Social Security taxes (SECA) payable on
the fair rental value of a parsonage and on the housing allowance
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Housing AllowanceActual Eligible Expenses• Mortgage or rent and Home Owers Assoc.• Utilities• Property taxes• Insurance• Furnishings• Repairs and improvements
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How to Designate aHousing Allowance• Minister provides church an estimate of
anticipated housing expenses (form on our website)
• Church officially designates and documents housing allowance in advance
• Action recorded in church minutes and minister is notified
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How to Designate aHousing Allowance• Housing allowance may be changed
prospectively during the year• You must change your HA before you pay
for repair bill• Minister is responsible for documenting
expenses
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Tax Issues for the Minister
•When you are doing your resolutions for your housing allowance, add to it “until changed.”•Keeps your housing allowance in effect until you change it again.•You lose your housing allowance if your form says for 2010 and you go into 2011 without it being renewed.•Keep good records. No proof, no write off
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Step 10: W-2 Preparation
Ministerial Form
HSA
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Step 10: W-2 Preparation
Non-ministerial Form
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Tax Issues for the Minister
•Mortgage interest and property taxes can be deducted twice – once as housing allowance and then as Schedule A itemized deductions