Jayroe

By Aubrey Jayroe

I understand that there was a court ruling several months ago that questioned the constitutionality of the clergy housing allowance. Has anything transpired regarding the clergy housing?

Yes. A judge in Wisconsin declared the clergy housing as unconstitutional several months ago.  Fortunately, however, this has changed.

The decision was appealed and, just recently, the Seventh Circuit Court of Appeals reversed the lower court’s ruling that the clergy housing allowance was an unconstitutional preference for religion, thus continuing to allow the housing allowance for qualified ministers.

While this does appear to be a victory for all the ministers who utilize the housing allowance, there could be future challenges to this law.

Presently, a church should declare the housing allowance each year in a written document with a stipulated amount to be allowed for the housing. This will allow the qualifying minister to reduce his overall taxable income by the allowed housing allowance.

Just a reminder, the housing allowance is not taxable to income tax; however, it is subject to self-employment tax unless the minister has been approved to be exempt from paying self-employment taxes. The minister who is exempt must have an approved Form 4361 to secure the exemption.

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