Designate a Clergy Parsonage Allowance
(for clergy living in unfurnished parsonages)
Designating a portion of salary as a “Parsonage Allowance” provides the single best tax advantage offered to clergy living in a parsonage.
A parsonage and/or furnishings allowance may be designated as a portion of annual salary and may be used by a pastor for maintaining and furnishing their the parsonage. To the extent that the allowance is used for household furnishings, etc., it is excluded income for federal and state income taxation. The designation is still considered part of the base for calculating social security income.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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