Friday, August 31, 2018
Hey Fletch … I am a full time associate pastor and am applying for an apartment that is part of the SMART Housing program, a kind of government assisted, affordable housing program. The city requires verification of income to qualify applicants. I receive a housing allowance from my church that is not categorized as taxable income. Without counting the housing allowance as part of my income, I fall within the income requirements to qualify for SMART Housing. Do I qualify for SMART Housing if my housing allowance bumps me up above the maximum income requirement to qualify?
DRF—While you don’t pay federal income tax on the actual expenses of your ministerial housing allowance, you do pay SECA tax on it. The housing allowance is generally considered a part of your total income. As I looked at a page that lists the income limits, I found this:
Sources of Income Included in Calculating Household Income
Some examples include wages from employment, net income from self-employment, monthly Social Security or Disability checks, food stamps, and child support.
This seems to imply that the housing allowance would be included. Also, on the form that you would fill out, you may need to provide a copy of your W2:
For documentation of income, applicants must submit either:
1) an IRS 1040 form, IRS EZ 1040, or IRS transcript from the previous fiscal year; or
2) any two of the following: employer letter(s), W-2 form(s), or last three pay stubs.
Line 14 of your W2 income statement from the church includes your housing allowance. So, the program will know your base income and your housing allowance.
The best thing is to contact the program and ask the question. There may be a loophole that would benefit you! The ministerial housing allowance is one of the most complicated parts of the rules and regulations that pastors and ministry workers benefit from.