Chapter 17 Rental Allowance and Fair Rental Value of a Parsonage . Your parsonage allowance is that fair rental value plus any utilities and other costs your church pays for you. The pastor purchased her own home and the fair rental value of her home is $10,000 per year. Enter your allowance on the Tell Us About your Clergy Housing screen. elders would constitute a housing allowance, provided that such allowance did not exceed the home’s fair rental value, including furnishings and appurtenances, such as a garage, plus the cost of utilities and any other applicable tax law limits. The Fair Market Rent in Maine ranges from $714 for a 2-bedroom apartment in Piscataquis County, ME to $1,516 for a 2-bedroom unit in Portland, ME HUD Metro FMR Area. Example: A church pays its pastor annual compensation of $45,000, of which $11,000 is designated as a housing allowance. How are a clergy housing allowance and the fair rental value of provided housing treated for tax purposes? The actual Tax Guide for Ministers Then, as long as the housing allowance is less than $1700 a month, it would not be taxable. For active clergy, the amounts are included in gross income for SE and income taxes. He spends $30,000 on housing expenses. Pastor Todd designates a housing allowance of $20,000. of housing allowance (e.g., the fair rental value of a parsonage or a cash payment characterized as a housing allowance in lieu of a parsonage) on informational returns such as Internal Revenue Service Form W-2s, 1099s, etc. The Fair Market Rent in Rhode Island ranges from $1,075 for a 2-bedroom apartment in Providence-Fall River, RI-MA HUD Metro FMR Area to $1,419 for a 2-bedroom unit in Newport-Middleton-Portsmouth, RI HUD Metro FMR Area. Example Of Parsonage Allowance Tax Calculations For example, let’s say your church pays you $40,000 a year and you have designated $5,000 of that as a cash housing allowance to pay for furniture, light bulbs, etc. If you own your home and receive as part of your pay a housing or rental allowance, you may exclude from gross income the smallest of the following: 1) The amount actually used to provided a home, 2) The amount officially designated as housing allowance, or 3) The fair rental value of the home, including furnishings, utilities, garage, etc. In this scenario, Pastor Todd has overspent his housing allowance by $10,000. Refer to this year’s . If a minister owns a home, the amount excluded from the minister’s gross income as a housing allowance is limited to the least of the following three amounts: The amount actually used to provide a home. For Qualifying Expenses, enter the lesser of: Your qualified housing expenses; The fair rental value of your housing expenses; Your housing or parsonage allowance; Select Continue, and on the Clergy Self-Employment Tax screen, choose the appropriate option and Continue again. The designation * For all clergy, the amounts are excluded from gross income for both SE and income taxes. Therefore, most active clergy never need to show the exclusion of the housing allowance when filing their The fair rental value of the home. the lesser of the fair rental value, designated housing allowance, or actual housing expenses, in this case, $10,000. 100 “Rental allowance” means an amount paid to a minister to rent or otherwise provide a home if such amount is designated as rental allowance pursuant to official action taken in advance of such payment by the employing church or other qualified organization. If it was more than $1700 a month, the amount over would be taxable. Rhode Island (RI) has the 11th highest rent in the country out of 56 states and territories. His home has a fair rental value of $50,000. Allowable Housing Expenditures: Maine (ME) has the 25th highest rent in the country out of 56 states and territories. If you need help determining the FMV as if it was a rental, you can check places like zillow, Craigslist, or ask a real estate agent for a quick estimate. Fair Market Rents (FMRs) are used to determine payment standard amounts for the Housing Choice Voucher program, to determine initial renewal rents for some expiring project-based Section 8 contracts, to determine initial rents for housing assistance payment (HAP) contracts in the Moderate Rehabilitation Single Room Occupancy program (Mod Rehab), rent ceilings for rental units in … The amount officially designated as a housing allowance. 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