THE PASTOR'S HOUSE
The Invaluable Housing AllowanceTM
Resources

The following links are public service information available to you to keep you informed.

A. Social Security Administration: www.ssa.gov - The official website of the social security administration.  There is a plethora of FREE information readily available.  Clergy should become familiar with accessing this website.  Most importantly, to check their annual social security contributions history.  We encourage all clergy to set up a My Social Security Account and to check it at least twice a year. At the beginning of the year and towards the end of the year.  Clergy social security retirement accounts are funded via their annual income tax returns, specifically Form 1040 SE. So we strongly encourage clergy to be sure this form is included in their annual income tax filing UNLESS they have opted out early in ministry.  You and your family depend heavily on your account being accurate.

B. IRS Current Year Tax Rates:  www.irs.gov/individuals - Historically, the average taxpayer was and still may be uncomfortable with accessing the IRS website.  Understandably, but please know that things have changed considerably. The response time for many inquiries is egregious and you will be waiting forever. You can access the IRS website and obtain most of the information you would otherwise have to wait months to receive.  Actually you can set up a personal account and get information such as:

  • If your refund is different than expected
  • How to understand a tax letter
  • Filing returns past the due dates.
  • Update address and/or name
  • How to amend your tax return, and so much more

C. SECA vs FICA – Many clergy are still confused about this difference and how it impacts them.  There are two systems within which all individual taxpayers pay (contribute to) their social security retirement fund.  The two systems are FICA and SECA.

FICA – Federal Insurance Contributions Act

SECA – Self Employment Contributions Act – IRS Pub 517 -. www.irs.gov/publications/p517. ALL working individuals contribute to their retirement account with SSA via one of these systems.  All clergy income earned in ministry is subject to SECA, (unless they have exempted themselves). This is not recommended for a tax savings method.  It is beneficial only for certain situations.  (Check with a financial planner to be certain.)  Opting out should not be used just to increase take home pay.  If the clergy taxpayers ONLY source of income is ministry, opting out would most likely not be advisable.  (Check with a financial advisor first)

Current Year Tax Filing Dates- The standard tax filing date is April 15th unless the due date falls on a Saturday, Sunday or legal holiday. Check the IRS website. If you still need more time there are options.  Remember the extension is an extension to file, not an extension to pay.  (Go figure)   How do you know what you owe if you haven’t filed?  I supposed tax planning is the answer.

Retirement Housing Allowance – A retirement housing allowance is a little known concept in certain communities, but well worth looking into.  As per Revenue Ruling 63-156, 1963-2 C.B. 79, a minister of the Gospel MAY be able to exclude from taxable income, a portion of their retirement compensation, designated as housing allowance, IF such action is taken in advance by the employing church.  Note.  The employing church may not be aware of this option, so it is advisable for the pastor to make this consideration with their retirement planner and present it to their church administrators. Recommendation: Check with your retirement planning advisor and insist that they look into this for you.  Your 403b distribution MAY be tax exempt upon retirement, if planned properly.  The savings could be huge.