Double Dipping for Clergy

Discussion in 'Tax' started by rod, Jan 15, 2004.

  1. rod

    rod Guest

    A pastor here in my area was asking me if it is legal to
    deduct his mortgage interest and property taxes twice. Here
    is an example of what I mean. His gross salary is $60000,
    but after his houseing allowance (which includes interest,
    taxes, utilities, maintance, etc...) equal around $35000. So
    when he gets his W-2 from his emplorer in the income box it
    states $25000 and nothing else in other box except box 14
    which states houseing allowance of $35000. And then again he
    can claim the mortgage int and property taxes on Schedule A.
    To me this is double dipping. I have talke to some people
    that work for the church and they told me that this is true
    and does it not only apply to clergy, it also applies to the
    military (if they get a housing allowance). I personally
    could not find anything about this double dipping on the IRS
    web site and the publication for clergy. Just would like
    some insight of where I could find something to state this.
     
    rod, Jan 15, 2004
    #1
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  2. rod

    Drewremedy Guest

    A pastor here in my area was asking me if it is legal to
    Its legal and not a double deduction at all.

    His housing allowance is simply not income at all in tax
    lingo. So that payment sands alone.

    If he actually pays RE and Interest then he is entitled to
    deduct same.

    Whether some church goes overboard in paying excessive
    allowances so as to reduce the tax consequences is another
    area not part of your question.
     
    Drewremedy, Jan 16, 2004
    #2
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  3. rod

    MAT1040X Guest

    Even though the minister excludes housing allowance from his
    taxable income, he is still allowed to claim mortgage
    interest and property taxes as deductions on Schedule A.
    Yes, it is double dipping. But the minister can't exclude
    all of the $35,000 if he didn't spend it all on housing
    expenses. If he only spent $30,000 on housing costs then the
    other $5,000 would come back in as taxable income (wages) on
    line 7.

    Just as an aside, the ministers total compensation (housing
    allowance plus W-2 income) is subject to SE tax unless he
    has opted out of Social Security coverage on Form 4361.

    You might want to take a look at churchlawtoday.com. Lots
    of information there on ministers.

    Mary Ann Thomas, EA in AZ
     
    MAT1040X, Jan 16, 2004
    #3
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