As a clergy you may not require to pay taxes on your house allowance although there are special circumstances that may dictate you do. This highlights the need for the clergy to have clarity on all matters housing allowance to know what to include in W-2 so as to take advantage of tax deductions. Housing allowance per say is not for every member of the clergy. To relevant authorities the minister is someone appointed , commissioned or licensed to carry out religious functions. Before any payments are made prior designation for a definite amount that are specified should be done.
House allowance must be used for personal needs only especially those for the home. A board or leadership is required put a stamp on the allowance and make it official through writing. This is to carter for any arising complaints regarding the housing allowance that may be tabled in future. It is the relevant authorities that get to decide how much is just right to be given as house allowance. Whether the clergy depends entirely on the organization or has a job on the side they are entitled to have upto a hundred percent of their compensation classified as housing allowance as long as it does not surpass the bare minimum.
Purchase, renting and maintenance of the clergy’s home are all included in the house allowance what is not however is vacation and commercial housing. House allowance can also encompass expenses of personal nature. House allowance can be extended to include mortgage payments, insurance and property taxes that are not included in the mortgage payments, homeowners dues as well as utilities. Alongside the figures given by the religious organization, the clergy must give a full account of their utilities on all things home.
For tax return support in event of auditing , the clergy should be able to supply well kept records on their expenses. They should be kept in a manner that they are easy to retrieve when requested for. Seven years of record keeping is enough to defend tax audits. For the purposes of transparency of due process, giving evidence of expenditure through audit trails and receipts by the minister is encouraged. The housing allowance while excludable from the ministers gross income may be taxable if the misters actual spending is less than what was estimated and in event it is higher than the relevant authorities allowable. Its important for the clergy to get professional assistance that specialize with this particular area so as to guide them on how to go about these and other special taxes more so with the changes on the tax code.