Religious Tax Benefits: Minster Housing Allowance

Please note: This blog is current to the date of its publication, February 1, 2022. For more recent updates, contact SST’s experts

As we draw closer to key deadlines for the 2021 tax season, it’s important that religious institutions are aware of the various tax benefits from the Internal Revenue Service (IRS) that they may be eligible for. Specifically, some churches might not be aware that ministers could qualify for a housing allowance, according to Publication 517 and the Minister Audit Technique Guide from the IRS.

To be considered a minister by the IRS, and therefore eligible for a housing allowance, the person in question must:

  • Be duly ordained, a commissioner or a licensed minister of a church
  • Perform sacerdotal functions
  • Conduct religious worship
  • Administer and maintain a religious organization
  • Teach and administer duties at theological seminaries

While the IRS has provided an extensive list of a minister’s functions, it’s possible to qualify without meeting every requirement on the agency’s list. However, the more functions a minister can perform, the more likely they are to be recognized by the IRS.

If you perform some of the functions above but do not meet the IRS’ definition of a minister, there are still ways to receive a housing allowance. To access additional information about housing allowances and to review a full list of the IRS’ requirements for ministers, visit page 4 of the IRS’ Minister Audit Technique Guide.

For additional assistance and counsel from a team that specializes in accounting services for faith-based institutions, contact SST today.