Ministers are unique. They receive an inspirational calling from God to ministry accompanied by a special dual tax status from the IRS. Ministers for Tax Purposes also receive certain tax benefits — one of the most important being the ministers' housing allowance.
Section 107 of the Internal Revenue Code allows ministers of the gospel to exclude some or all of their ministerial income designated as housing allowance from income for federal income tax purposes.
If a housing allowance is properly designated in advance, a minister can exclude the lowest of the following three amounts from income for federal tax purposes:
Ministers for Tax Purposes have a dual tax status. They are considered employees for income tax purposes and self-employed for Social Security tax purposes.
Ministers for Tax Purposes are:
Ministers for Tax Purposes are eligible for a housing allowance on their ministerial earnings. This designation can be made only in advance and should be made in writing by the church before the start of each year for tax purposes.
As a denominational pension board, GuideStone can facilitate housing allowance for retired ministers (within IRS limits) — a unique benefit for you! This housing allowance is not subject to Social Security taxes (SECA).
For more information about housing allowance qualifications and annual designations, review our Questions and Answers About the Minister's Housing Allowance.