A frequently asked question about Clergy Housing is whether a minister must re-designate their housing allowance every year or if they can simply enter a designation that covers multiple years. Surprisingly, Clergy are able to designate for periods longer than a single year.
IRS does not specify how long a housing allowance designation must remain in effect. While most Churches only designate for a single calendar year, you could stretch it out to cover multiple years. The designation is dependent on the wording that you put into the agreement. For example, you could create a designation that says it is in effect “for the current year and for all future years until altered”.
Is it still a good idea to designate and submit housing for approval annually? Yes. Entering a new designation each year will allow you to make adjustments for your anticipated expenses. However, putting a clause into the agreement to cover future years might also be a good idea, just in case you forget to designate one year or the board is unable to designate for any reason.
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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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