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Frequently Asked Tax Questions

Interest, Dividends, Other Types of Income - Ministers' Compensation & Housing Allowance

  1. I am a minister and receive a salary plus a housing allowance. Is the housing allowance considered income and where do I report it?
  2. Are all ministers treated as self-employed for Social Security purposes?

Rev. date: 12/18/2014

I am a minister and receive a salary plus a housing allowance. Is the housing allowance considered income and where do I report it?

A minister's housing allowance (sometimes called a parsonage allowance or a rental allowance) is excludable from gross income for income tax purposes but not for self-employment tax purposes.
If you receive as part of your salary (for services as a minister) an amount officially designated as a housing allowance, you can exclude from gross income the lesser of the following amounts:
The payments must be used in the year received.
Include any amount of the allowance that you cannot exclude with your wages on line 7 of Form 1040 (.pdf), U.S. Individual Income Tax Return.
If your congregation furnishes housing in kind as pay for your services as a minister instead of a housing allowance, you may exclude the value of the housing from income, but you must include the fair market rental value of the housing in net earnings from self-employment for self-employment tax purposes.
For more information on a minister’s housing allowance, refer to Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.
For information on earnings for clergy and reporting of self-employment tax, refer to Tax Topic 417, Earnings for Clergy.

Rev. date: 12/18/2014

Are all ministers treated as self-employed for Social Security purposes?

Services that a duly ordained, commissioned or licensed minister performs in the exercise of his or her ministry are generally covered under the Self-Employment Contributions Act (SECA). This means the minister is exempt from Social Security and Medicare withholding, but the minister is responsible for paying self-employment tax on his or her net earnings from self-employment.