As Christian leaders, you dedicate your lives to serving your congregations and communities. At Servant Solutions, our mission is “Serving Those Who Serve,” and our vision is to improve financial security for servants of the church. One of the key benefits available to qualifying ministers is the Clergy Housing Allowance, which can result in significant tax savings.
The Clergy Housing Allowance is a provision that allows ordained, licensed, or commissioned ministers to exclude some or all of their housing expenses from gross income for federal income tax purposes. This exclusion can be a game-changer for your financial planning, but it requires careful documentation and proper designation to maximize its benefits.
Understanding the Housing Allowance While Employed
To take advantage of the Housing Allowance, your church or ministry must officially designate a portion of your compensation as a housing allowance before it is paid. This allowance can cover expenses such as rent, mortgage payments, utilities, and furnishings. The designated amount must be the lesser of the following for each tax year:
The amount officially designated as a housing allowance.
The amount actually spent on eligible housing expenses.
The fair rental value of the home (furnished, including utilities).
Properly tracking and documenting these expenses throughout the year is crucial. On our website, you can find an Excel spreadsheet designed to help you track your full-year expenses and determine your Housing Allowance amount, ultimately helping you save money now.
Understanding the Housing Allowance in Retirement
Our unique 403b (9)designation with the IRS allows retired ministers to continue claiming the Housing Allowance tax benefit in retirement. This can be particularly beneficial as it provides ongoing tax savings during a time when managing expenses is critical. We provide a handy information sheet on our website to assist you in claiming this benefit as a retiree from Servant Solutions.
Free Financial Planning
At Servant Solutions, we understand that our members are often busy ministry leaders pulled in many directions. That’s why we strive to make financial planning as seamless as possible. Our fees and expenses are lower than the average retirement plan, and we offer free financial planning services to all members. Additionally, we provide free DIY family legal documents for all members and their spouses.
We encourage you to visit our website to take advantage of these resources and ensure you are maximizing your Housing Allowance benefit. By doing so, you can focus more on your calling and less on financial worries. Our team at Servant Solutions is here to support you every step of the way.
For more information, resources, and to download our expense tracking spreadsheet, visit Servant Solutions.
By understanding and properly utilizing the clergy Housing Allowance, you can achieve significant tax savings, both now and in retirement. Let Servant Solutions help you navigate this process and enhance your financial security as you continue to serve.
Servant Solutions was pleased to host a webinar on this topic. To view the recording, click here.