January 22, 2011

Housing Allowance for U.S. Resident Supported for Itinerant Foreign Ministry

Question:

A non-profit Christian organization supported a missionary who is not an ordained minister. He frequently traveled to a foreign country to serve the organization's charitable purposes. While there, the organization provided his temporary living expenses. He maintained a personal residence in the U.S. At the end of the year, he declared to the organization his housing expenses and requested that a portion of his support be, thus, treated as non-taxable.

On this basis, can the ministry exclude a portion of his support as a ministerial housing allowance?

Answer:

First, if the employee meets the definition of a minister, it is not necessary that he be ordained. Click on the following link for more information.

IRS Definition of "Minister"

Second, a minister's primary residence qualifies for the housing allowance designation. Based on the information provided in the Question, the minister appears to meet this requirement.

Finally, the housing designation may not be made retroactively. This requirement appears to prohibit the income exclusion for compensation of past services. However, the minister and organization should establish a housing designation for future compensation.

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