Housing Allowances: Check Your Paycheck

It’s a good ministry practice to review your pastor’s housing allowance each year, but do you know that the designated amount can be amended at any time? It’s important for pastors to request changes sooner rather than later, because adjustments can only be applied to the remaining months of a calendar year and cannot be made retroactively.

Actual costs for expenses like a rent or mortgage payment, utilities, and repairs may be higher or lower than initial estimates. Here are three self-checks that your ministry can complete this month to help avoid end-of-year surprises:

  • Check your paycheck. Have your pastor review his or her paycheck. If your ministry reports a housing allowance to be excluded from taxable income, then there will be two lines: A salary (CLRGTX) line and a housing allowance (RVHSNT) line.
  • If the RVHSNT line is absent, then non-taxable income for the pastor’s housing allowance is not being set aside or otherwise reflected in payroll. This can affect a pastor’s Form W-2. Contact your MinistryWorks payroll specialist if you feel this is an error.
    Housing Allowance
  • Check expense amounts against estimates. Verify that the actual payment for the mortgage or rent aligns with the estimated amount. Determine if a costly repair will be needed—like a new roof—that was not included in the initial budget. Review utilities for rate increases.
  • Check with your board. Make sure that your ministry’s governing board designated a housing allowance in writing. Verbal agreements are difficult to prove—a signed resolution that breaks down housing allowance expenses into categories is a best practice.

If you have questions about your pastor’s housing allowance, contact your MinistryWorks payroll specialist.

The information in this article is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. We strongly encourage you to regularly consult with a local attorney as part of your risk management program.

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