Ministers of the gospel might exclude from gross earnings the least of the next three quantities: the quantity designated as a housing allowance by the using church or different certified group; the quantity really spent to supply or hire a house; or the truthful rental worth of the house, together with furnishings, utilities, storage, and many others. For instance, if a church designates $20,000 as a housing allowance, however the minister solely spends $18,000 on housing bills, then solely $18,000 may be excluded. Conversely, if the truthful rental worth of their house is $25,000, however the designated allowance is $20,000, solely $20,000 may be excluded.
This exclusion acknowledges the distinctive nature of ministerial roles, the place offering housing is usually integral to the place. Traditionally, parsonages had been offered on to clergy. The exclusion permits ministers to obtain comparable advantages, whether or not they obtain a delegated allowance or reside in a church-owned residence. This provision can supply important tax benefits, doubtlessly lowering a minister’s total tax burden. This profit may be significantly useful for these serving in areas with excessive housing prices.
