As we enter the final stretch of 2019, it’s time to review the year’s housing expenses and how they align with your designated housing allowance. It’s always a good idea to review your housing allowance about this time of year to make sure you are maximizing your tax savings. How well your actual expenses have lined up with your designated allowance will affect what you do the remainder of the year.
Free Minister Housing Allowance Calculator & Worksheets
I’ve created several tools that will help you as you review your housing allowance:
Online Calculator
Online Housing Allowance Calculator
Our Pastor’s Wallet online calculator can be used to both anticipate expenses for the coming year and review the past year’s expenses. Make sure that you are entering expenses on an annual basis by multiplying monthly expenses by the number of months they have or will cover.
Downloadable .PDF Document
If you just want a real piece of paper to write on, click the download button above and print out the document. It includes spaces for the most common housing expenses and several open spaces for your own unique expenses.
Downloadable Excel Spreadsheet
For Excel users who want to personalize their calculations or save them for the future, click the above link to download a .xlsx document. It’s set up to automatically add up your housing expenses as you plug them in.
Minister Housing Allowance Limitations
It’s important to remember that just because you spent a certain amount on housing expenses for the year, that doesn’t automatically qualify them for the clergy housing allowance. The IRS has placed limits on how much can be claimed.
You may only claim the lesser of:
- the amount actually used to provide or rent a home;
- the fair market rental value of the home (including furnishings, utilities, garage, etc.);
- the amount officially designated (in advance of payment) as a housing allowance; or
- an amount which represents reasonable pay for your services.
To learn more about calculating the fair market rental value of your home, go here.
What To Do If Your Housing Allowance Is Off
If you’ve been spending more than expected and don’t have a lot of designated allowance left for the remainder of the year, you may want to put off purchases and projects. Anything you spend above what was previously designated for the year will come out of your taxable income and you will receive no tax benefits. It may be worthwhile to postpone fixing your deck or buying that new oven until January and request a higher allowance for 2020 to cover it.
What if you haven’t spent as much as you expected? If your housing allowance exceeds your expenses for the year, now might be a good time to tackle your list of house projects. Paint that bathroom you’ve been eyeing, do that landscaping project you’ve been considering or finally buy your wife that new down comforter she’s had her heart set on. Your tax-exempt allowance has already been designated, so you might as well make the most of it.
If you still haven’t spent your entire designated amount by the end of the year, you will need to add it back into your taxable income when you file your tax return in the spring. Luckily, that’s not nearly as intimidating as it sounds. This article details step by step just how to do it.
I hope you find these resources helpful. If you have any questions, ask in the comments or send me an email!
6 Responses
Kelly E. McClelland
March 12, 2020Thank you for a helpful spreadsheet tool! I am blessed and pray you are too!
Amy
March 13, 2020You’re very welcome!
James J Walker
October 30, 2023I am trying to find out if extra mortgage payments on the principle only are claimable as part of my housing allowance? Or can I only claim my monthly principle payment?
Amy
November 2, 2023James, extra mortgage payments are claimable as long as you don’t claim more than the fair market rental value of the home. https://pastorswallet.com/how-to-calculate-fair-market-rental-value-for-the-clergy-housing-allowance/
Jane
November 30, 2023We have a property with 10 acres that will require a tractor to maintain the pastures as well as to plow the driveway in snowy winters. Does a tractor purchase qualify as an expenditure?
Amy
December 1, 2023Jane, if you’re using the pastures to generate an income, then it would not qualify. Otherwise, it isn’t spelled out anywhere in the law so you will have to make a judgment call. The way the law is written, it talks of tax-free income “to provide a home.” Personally, my home doesn’t require a tractor but I understand that yours might. If you can’t live in your home without a tractor to plow the driveway, then I would be comfortable claiming it as an allowable expense. (This isn’t even the first time I’ve gotten this question!)