Does Clergy Parsonage – Housing Allowance for Pastors count for
Covered CA & Medi-Cal  MAGI  Modified Adjusted Gross Income?

Parsonage – Housing Allowance for Clergy, Pastors, #Priests, Rabbi’s, Iman’s

• A minister – pastor  ordained, licensed or commissioned who receives a housing allowance may exclude the allowance from gross income to the extent it is used to pay expenses in providing a home. Generally, those expenses include
  • rent,
  • mortgage interest,
  • utilities, repairs, and
  • other expenses directly relating to providing a home.
  • The amount excluded cannot be more than the reasonable compensation for the pastor – minister’s services.
• If you own your home, you may still claim deductions for mortgage interest and real property taxes. If your housing allowance exceeds the lesser of your reasonable compensation, the fair rental value of the home, or your actual expenses, you must include the amount of the excess in income.
• The minister’s employing organization must officially designate the allowance as a housing allowance before paying it to the minister.  
  • Thus, parsonage does NOT appear (check with your own CPA or Tax Attorney) to count toward MAGI, subsidies – advance premium tax or Medi-Cal Qualification. 
    • Learn More IRS Tax Topic 417
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• Housing Allowance for Pastors Clergy Video 
• irs.gov/Earnings for Clergy Housing Allowance /tc417
• irs.gov/ministers-compensation-housing-allowance
• How to fill out a Minister’s W-2 Form
  • ONLINE Worksheet
• Ready-to-use resolution language for church board to set a clergy housing allowance
  • Church Law Sample
  • church law and tax.com/designating-a-housing-allowance
• HOW MUCH HOUSING ALLOWANCE CAN A PASTOR CLAIM?

FAQ

• Question I am a pastor who is looking to get health insurance for Covered California.  Do I have to include my housing allowance as part of my gross income?  Do you know anything about applying for Covered California and using the salary only portion of clergy compensation (excluding housing allowance) to qualify for financial assistance for health care?
  .
• Answer What do you expect to show on line 11 adjusted gross income of your 1040 form? MAGI Income.
  • Brokers nor Covered CA can give tax advice. However, just follow the rules above and you should be able to exclude your housing allowance.
    • Click here for instructions to appoint us as your agent so that we can get compensated for helping you. No extra charge
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• I’m a minister and receive a salary plus a housing allowance. Is the housing allowance considered income and where do I report it?
  • IRS Answer