A church pays the rent to its pastor's landlord each month. Do the rental payments qualify for housing allowance? Are the utilities also considered housing allowance if paid directly by the church?
Generally, it is irrelevant whether a church pays its minister’s housing expenses directly or designates a portion of his compensation as housing allowance for his personal payment of these expenses. We say “generally” because at least one state (Pennsylvania) permits only direct payment of housing expenses in order to enjoy tax free status.