Poster Housing Allowance Guide
How the Housing Allowance Works
Your church board must officially designate the housing allowance in advance (usually recorded in the board minutes). You can then exclude from taxable income the smallest of these three amounts:
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The amount your church officially designated.
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Your actual housing expenses paid during the year.
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The fair rental value of your home (fully furnished, including appurtenances such as a garage) plus utilities.
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Any portion of the allowance you receive that exceeds these limits must be reported as taxable income. That’s why good record-keeping is so important!
Important Note:
The housing allowance is excluded from federal income tax but is included when calculating self-employment tax (SECA). Your church will usually note the allowance in Box 14 of your W-2 for information only.
What Expenses Can Count as Housing Expenses?
A wide range of costs related to providing or maintaining your principal residence can qualify. Here’s a helpful list of commonly accepted housing expenses:
Core Housing Costs
- Rent payments
- Mortgage payments (principal and interest)
- Down payment on a home (in the year purchased)
- Home equity loan payments (only if used for housing)
Taxes & Insurance
- Real estate / property taxes
- Homeowner’s or renter’s insurance
- Personal property insurance on furnishings
Utilities & Services
- Electricity, natural gas, heating oil, or propane
- Water, sewer, and trash collection
- Internet and cable/streaming services
- Basic telephone (landline or home service charge)