M Malody - Clergy Question please

[BulldogTom]

Mike, if you have a minute could you point me to some guideance on Clergy Taxes?

Taxpayer is a traveling evangelist. He goes from church to church working a program for men's ministries. He is ordained and works with a larger ministry which pays him as a contractor. He also takes in offerings at the churches he works with, and gets money from other churches that support his efforts in his ministry (they give him cash on a regular basis like a missionary).

Can this taxpayer get the amount that the larger ministry he is associated with designated as housing?

Thanks - and I am sure this is not a cut and dry answer. You probably need more facts. Just ask.

Tom

Hollister, CA

[MAMalody]

An evanglist may qualify for minister's tax treatment, which would include the housing allowance designation.This designation could even include those monies received from the individual churches. RR 64-326, and Letter Ruling 8825025, Whittington v. Commissioner, T.C.Memo. 2000-296(2000) seem to be most on point with a slight allusion in Reg, 1.1402©-5©(2). If this does not answer your question let me know and we can go from here. I would be happy to respond on this board or via e-mail. Whatever works best for you. Remember, if you should elect e-mail, you will loose the peer review this board provides.

[gfizer]

Doesn't the payment have to be officially designated as housing allowance by the employing church or organization before the payment is made?

[BulldogTom]

Gfizer hit exactly what I was reading. I don't see anything that says one way or another. They always seem to mention an "employed minister" in connection with the housing allowance.

Thanks Mike. I will look at that ruling and regulation. I will post here if I have more questions.

Tom

Hollister, CA

[jlewis]

Attached article from Tax Advisor in 2009 may be of some help.

Clergy Rules.pdf

[BulldogTom]

<<An evanglist may qualify for minister's tax treatment, which would include the housing allowance designation.>>

Take a look at McFarland v. Commissioner TC 1992-440. I think it is more on point about the issue of can a self employed minister exclude housing allowance, but it still leaves the sticky question of how to get it designated in advance. The RR 64-326 had the taxpayer negotiatin the housing allowance in advance and they refer to the places he traveled to as employer churches.

So I am thinking that a self employed traveling evangelist who has regular support from separate churches, but also recieves "free will offerings" at most of his ministry locations can ask the organizations that support him regularly to designate those funds as housing allowance and will claim as regular income the free will offerings he recieves.

Does this sound right?

Thanks again Mike. You are a great resource and I very much appreciate your time.

Tom

Hollister, CA

[kcjenkins]

Sounds right to me, Tom. But will be interested in Mike's opinion, he's the expert on the subject.

[MAMalody]

Sorry for the confusion. I thought you were asking whether your minister could have those monies designated as housing, not if he had already received the money and was looking for a retroactive designation. You are correct. The housing allowance must be designaged ahead of time. It can be designated by each entitity he is receiving income from, as long as it is before payment, this would also include church giving him "love offering" for a revival, crusade or filling a pulpit.

[JJStephens]

Like Mike, I do a boatload of clergy returns. I always recommend to my qualifying itinerant clients that they ask the churches at which they speak to designate their honorarium as housing allowance and so indicate on the check they receive.