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Pastor Housing allowance. Our church does not give our pastor a housing allowance, however he wants me to claim a housing allowance. How do I get this set up in payroll?

ie. Salary $60,000; Housing allowance: $25,000yr; Feder Withholding each pay $113.26mo; Fed Withholding $62.30mo. Our pastor figures all this on his own.

Does this make sense to anyone?. I'm no accountant and concerned how to get this entered correctly without year end screw up.

Can someone assist me please?

RivertonCC wrote: ↑

Sat Jan 04, 2025 10:12 pm

Pastor Housing allowance. Our church does not give our pastor a housing allowance, however he wants me to claim a housing allowance. How do I get this set up in payroll?

ie. Salary $60,000; Housing allowance: $25,000yr; Feder Withholding each pay $113.26mo; Fed Withholding $62.30mo. Our pastor figures all this on his own.

Does this make sense to anyone?. I'm no accountant and concerned how to get this entered correctly without year end screw up.

Can someone assist me please?

Before you do anything in Powerchurch, I would check the IRS rules on the requirements, one of which is that either the denomination, or the church board has to declare that a certain amount of the salary is declared a housing allowance. This has to be done PRIOR to the year the allowance is claimed.

Also, the Pastor should NOT be declaring any sort of taxes unless the church is sending these taxes to the IRS and the state as withholding, as the program should be doing the calculations, not the Pastor as the program will properly total the amounts that need to be on the quarterly IRS Form 941.

The two IRS pubs to look at are:

https://www.irs.gov/pub/irs-pdf/p1828.pdf
https://www.irs.gov/pub/irs-pdf/p517.pdf

That said, as the church does not give a housing allowance, that needs to be calculated out of the salary. If the pastor gets $60,000 a year, then the actual salary should be listed at $35,000, with the housing allowance set at $25,000. The Housing is not taxable under Fed Income Tax, it MAY BE under your state income tax, and it is most definitely taxable under the rules for SECA which the pastor has to pay.

So as you can see, its not a case of simply entering numbers.