X
Live    Worship    Grow    Heal

Clergy Housing Taxes – Don’t Panic (Yet)

During this time while many congregations are thinking about their 2019 budgets and the Supreme Court is in flux, it’s wise to keep this in the back of your minds. Periodically, there are movements to eliminate the clergy housing allowance, which is part of the clergy person’s compensation that is not subject to federal income tax. The subject has come up again, and there is no telling how it will be resolved. Here’s a concrete example of what the impact might be. If the housing allowance goes away, a clergy person making $39,000 would have to have his or her salary increase by $5,368 to maintain the same spending power.

The matter will likely go through several levels of courts and perhaps land at the Supreme Court, but expect there to be lots of discussion in the coming months. A challenge brought up five years ago was defeated, but it was on procedural grounds. The most recent plaintiffs have been found in the lower courts to have standing, so the outcome might be different than it has been in the past. The good news is that challenges will certainly be presented no matter what the decision is, so it could be years before a final determination is made. Another solution that could be attempted is to widen the housing allowance provision to other non-profits, but that will mean less tax revenue to the government, and that might me a tough sell.

Here are things that can be done now to plan for the possibility. Vestries can start reserving some money in their budgets to help offset the tax hit to their clergy person by eventually giving them raises. If the final decision turns out to be favorable to the clergy person, you’ll have a nice little nest egg to use for other things. Secondly, if you have a rectory or vicarage, you might delay plans to sell it if that has been discussed. Church-provided housing will not be affected by this possible ruling, so these houses as part of the total compensation will become even more valuable in attracting clergy in the future. Thirdly, each clergy person should consult advisors to see what would be the effect on their take-home pay if they didn’t have a housing allowance exemption.

Clergy folks, take a deep breath. This might not become an issue. I’ve found, though, that it’s best to plan for change rather than let change whack you in the face.


by
Category: #Communications, #Stewardship, #Sundays

Respond to this:

Your email address will not be published. Required fields are marked *

Recent Stories

Migration Missive
September 17, 2021

This is the first in a series of regular updates from our Diocesan Migration Missioner, Troy Elder, who can be reached at telder@edsd.org.  For further information about the Migration (formerly Border) Missioner position, please visit https://edsd.org/news/edsd-to-add-new-border-missioner.   Missions, Fields, and Borders   Orthodoxy and history suggest that Protestant mission involves a Christian protagonist crossing an […]

New COVID-19 Policies for Diocesan Staff and Events
August 31, 2021

Throughout the COVID-19 pandemic, the Episcopal Diocese of San Diego has been committed to loving God and our neighbors through public health policies that help ensure healthy practices within our diocese. Now that the Pfizer vaccination has been fully approved by the FDA, EDSD’s Executive Council met on Saturday, August 28, 2021, and approved a […]

Join me in prayer for the world
August 18, 2021

Dear Friends in Christ, The world feels overwhelming right now. The heartbreaking scenes of the withdrawal from Afghanistan and the refugees left behind; the devastation of another natural disaster in the suffering nation of Haiti; and the continuing COVID crisis at home and abroad leave us grief-stricken and wondering how we can help. Our help […]

View All News
Receive the latest news.

© Episcopal Diocese of San Diego 2021. All Rights Reserved.