What qualifies as parsonage allowance?
A parsonage allowance is a sum of money awarded by the same governing board of a house of worship to its minister to offset housing expenses. For tax purposes, this allowance is exempted from the recipient’s gross income. 1 A parsonage allowance may also be called a rental allowance or housing allowance.
What is the difference between parsonage and housing allowance?
If you receive money from the church for house rent, it is called a rental allowance. If the church pays for your house (based on its fair market value), it’s a housing allowance. And if the church provides a home for you, that is considered a parsonage.
What are actual expenses for parsonage?
Generally, those expenses include rent, mortgage interest, utilities, and other expenses directly relating to providing a home. The amount excluded can’t be more than reasonable compensation for the minister’s services. If you own your home, you may still claim deductions for mortgage interest and real property taxes.
Under which Internal Revenue Code is a minister’s parsonage exempt from income tax?
Internal Revenue Code section 107(2)
The parsonage allowance under Internal Revenue Code section 107(2), also known as the minister housing allowance, provides that a minister may exclude from his or her taxable income a “rental allowance paid to him as part of his compensation, to the extent used by him to rent or provide a home.” This exclusion has been …
How do I report a parsonage on my w2?
If the minister received a parsonage allowance, it will generally be reported in Form W-2 Box 14. The amount listed there is considered the fair rental value of the parsonage and will also need to be entered on the tax-free income worksheet.
Is parsonage allowance taxable?
A minister’s housing allowance (sometimes called a parsonage allowance or a rental allowance) is excludable from gross income for income tax purposes but not for self-employment tax purposes.
Why is it called a parsonage?
The priest of a church in the English countryside might live in a nearby parsonage. Parsonage literally means “house for a parson,” and a parson is the member of the clergy, mainly in the British Anglican church, although Lutherans often use this terminology too.
Why is it called a manse?
Ultimately derived from the Latin mansus, “dwelling”, from manere, “to remain”, by the 16th century the term meant both a dwelling and, in ecclesiastical contexts, the amount of land needed to support a single family.
Is parsonage income taxable?