Ministers of the gospel could 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 truly spent to offer or lease a house; or the honest 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 could be excluded. Conversely, if the honest rental worth of their house is $25,000, however the designated allowance is $20,000, solely $20,000 could 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 supplied on to clergy. The exclusion permits ministers to obtain related advantages, whether or not they obtain a chosen allowance or reside in a church-owned residence. This provision can provide important tax benefits, probably decreasing a minister’s total tax burden. This profit could be significantly useful for these serving in areas with excessive housing prices.
