Welcome to the exciting Church Administration podcast, informing, encouraging, and supporting your church. Your hosts are Michael Martin and Dan Busby from ECF. Hi and welcome back to another exciting Church Administration podcast. This is Michael Martin from ECF. We're so grateful that you've chosen to spend a few minutes with us today, especially during what we know can be a crazy busy time of year for many in the Finance and Administration role in the church. Well, I'm joined in studio once again by Dan Busby, President of ECF. Dan, welcome back to the podcast. It's good to be with you today. And we also have John van druten, who is the Executive Vice President, a veteran of the ECF team, and it's his first time on the podcast. John's an attorney, a CPA, and provides leadership to our team, helping churches and ministries comply with the ECFA standards. Well, John, we appreciate all you do at ECFA and we're glad to have you on the podcast today. Thanks so much, looking forward to the time together. Awesome. Well, guys, today we're here to discuss a very important topic, and that is the minister's housing exclusion. This is always a top area for questions at ECFA, and it's something that over the years, I know we've tried to provide a lot of help and resources on. But as we sit down to record the podcast today, it's actually really kind of a unique season, with even more questions surfacing, given the recent news of one Federal District Court ruling the minister's housing exclusion is unconstitutional. So understandably, I know we have many folks that are in the church world that are asking, "What's happening with the housing exclusion?" So today, we're going to tackle some of those legal updates...
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Clergy housing allowance worksheet 2024 Form: What You Should Know
You can also see my other free resources here: 2018 Financial Resources for Your Pastor and Church 2017 Financial Resources for Your Pastor and Church 2018 Financial Resources for Your Minister & Church Pastors — Get your free copy of my free downloadable pastor books Church Budget Templates — These templates are ideal for a Pastor's Bookkeeping program or an ongoing program which can be automated to manage various expense areas. What's Included in Your Payment? ​​What are the requirements to deduct this? (The Answer to Question 13) First, it's important to note that the minister housing allowance is not taxable. It is a deduction from gross income only. This deduction is commonly not itemized, which leaves you with little information about exactly what is being paid by the church to the minister. You must report the total amount that is being paid to you as per section 813 of the Internal Revenue Code: “For purposes of section 125 of the IRC and section 401(a)(17)(A) of the Social Security Act, the amount includible in gross income by reason of a Minister's Housing Allowance shall be based on the amount allowed to the minister in advance as an expense on amounts paid on behalf of the minister.” This allows you to exclude the amount from deductible employment expenses under a suitable in a section 863(h) Schedule C or section 863(j) Schedule D. You can further exclude it from the amount that qualifies your income for section 199 of the Internal Revenue Code. If you do not itemize deductions on your tax return, you only have to allocate the cost of the property to one of those sections. For example, for 2024 I had 2 property units. I used the one that was the main residence of my family and one was a rental property. All expenses were allocated between these two units. My total expenses for the two were 23,100. That included my housing allowance which was 23,000. On a per diem basis (which can be determined separately from the housing allowance), I paid about 2,000 that did not qualify as taxable expenses. When you report your expenses, it's important to remember that the amount of any expense that is included in itemized deductions is adjusted for the size of your home.
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