My husband, who pastored for many years, received a housing allowance from the church. He is now deceased and I am blessed that the church is providing some continuing income to me. Can I classify any of this as a housing allowance?
First of all, in order to receive a housing allowance the person must perform ministerial services such as weddings, ministering during services, baptizing, etc. The person must also be commissioned, licensed or ordained into the ministry.
So, in summary, to qualify for a housing allowance, the person has to be commissioned, licensed or ordained into the ministry and must perform ministerial services.
The IRS has ruled that church boards cannot designate a housing allowance for the surviving spouses of deceased ministers (Revenue Ruling 72-249). Also, according to IRS Letter Ruling 8404101(1984), any arrangement for paying a housing allowance for the deceased minister’s spouse is “includable in the gross income of that spouse beneficiary.”
Since the spouse of a deceased minister does not qualify as a minister, and since the housing allowance must be paid for ministerial services (a retired minister would qualify but not his spouse), the spouse cannot receive a housing allowance, thus taking advantage of a great tax break for ministers.