End of the Year Tax Planning Tips

As the end of the year is just around the corner, we want to be sure to remind all ministers to double check the amount you have received, to date, for housing allowance. You still have time to make adjustments for 2010, if necessary.  Please follow the steps below to confirm you are maximizing your tax position as it pertains to housing.

You will want to figure your total housing expenses for 2010; i.e. that is how much you have spent to date.  Be sure to include your estimate for the remainder of December, as well.  Once you have this total, you will fall into one of three categories listed below:

  • On Track:  Your projected housing expenses are relatively close to your housing allowance that is projected to be received from the ministry.  Thus, no adjustments are needed at this time.
  • More Housing Income than Expenses:  If you are projecting to have less housing expenses than what you are projecting to be paid in housing allowance, then you may want to proportionally reduce your housing income for the rest of the year and receive the income as regular taxable income (W-2 income).
  • More Housing Expenses than Income: If you are projecting to have more housing expenses than what you are projecting to be paid in housing allowance, then multiple steps need to occur.  We can help walk you through these steps if needed:
    1. Confirm that additional housing income can be received and still be below your Fair Rental Value.
    2. Request that the Board of Directors of your church, designate the additional income you will need as housing allowance, in advance.  We have a template for designating an additional amount for housing allowance throughout the year, when a minister becomes aware he needs to have an additional amount designated.  Please just let us know if you need assistance with this process, and we would be happy to help.
    3. Adjust your payroll accordingly.

Please let us know if you have any questions, and we’ll be glad to help out in any way.

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