On November 22nd, 2013, federal district court judge Barbara Crabb of the District Court for the Western District of Wisconsin struck down the ministerial housing allowance as an unconstitutional preference for religion. The ruling was in response to a lawsuit brought by the Freedom From Religion Foundation and two of its officers, challenging the constitutionality of the housing allowance. The federal government, which defended the housing allowance since it is a federal statute, asked the court to dismiss the lawsuit on the grounds that the plaintiffs lacked standing to pursue their claim in federal court. Standing is a constitutional requirement for any plaintiff in a federal case, and generally, it means that a plaintiff must have suffered some direct injury as a result of a challenged law. The Wisconsin Court concluded that the plaintiffs had standing, based on the fact that they would have been denied a housing allowance exclusion had they claimed one on their tax return. The government appealed this ruling to the Seventh Circuit Court of Appeals in Chicago, and on November 13, 2014, the appeals court issued its ruling, reversing the Wisconsin court's decision. The appeals court concluded that the plaintiffs lacked standing to pursue their challenge to the housing allowance. The plaintiffs had asserted that they had standing due to their injury of being denied a tax-free housing allowance should they claim one on their tax returns. However, the appeals court refused to base standing on theoretical injury. It concluded that the plaintiffs would have standing to challenge the constitutionality of the housing allowance only if they actually claimed an allowance on their tax returns that was later denied by the IRS, and that's exactly what they did. The Freedom From Religion Foundation declared a housing allowance for two of its officers, who thereafter filed amended...
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Retired minister housing allowance Form: What You Should Know
They are prohibited from deducting any additional income, and are able to include this allowance on line 27 of their 1040. A Minister's Housing Allowance — IRS The Internal Revenue Service (IRS) allows ministers of all established churches to deduct from their personal income, interest or dividends on the value of the Retired Ministers' Housing Allowance — Tax Act They do not need to itemize deductions. A retired minister may also deduct from their personal income tax and other income tax at a normal or near-normal deduction rate to treat this allowance as non-deductible income for purposes of Social Security, Medicare and Railroad Retirement Tax Act tax. When the government deems the allowance to be income, it allows it to be reported on 1040-N, 1040-X — Do you have a housing allowance? You may also qualify for exemption from withholding. For this, you need to show that you spent the majority of the year living in and working in your church/chapel or in a religious-based organization. There are some additional eligibility requirements for clergy with a housing allowance. Ministers' Housing Allowance — IRS Ministers may also qualify for exemption from the Social Security contribution portion of their benefits. Ministers may also qualify for exemption from Medicare Part B (Part A). This is because of the services ministers must provide (such as pastoral care) and the fact that the ministers are not working full-time. The ministers' housing allowance is used for housing expenses not subject to Medicare for individuals. Ministers may also qualify for exemption from the Railroad Retirement Tax Act (RITA). Housing Allowance: What Every Retired Minister Should Know When a retired church pastor receives a retirement allowance or housing allowance, he must report the expense on line 27 of his 1040-US and enter it on the same line. This can potentially cause problems for former ministers, if the housing allowance was not reported on line 27 as a business expense or if it was reported incorrectly on the correct line of the form. A retired minister should check each financial statement he receives from church with an accountant to make sure the allowance was properly reported as expenses and that you received all the correct information from the church for your annual statement. If you need help with your IRS forms, or to help with tax planning, check out The Tax Counsel for Ministries.
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