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Housing Allowance and Social Security Earnings Test

Question:

A pastor who receives a housing allowance has recently begun collecting Social Security benefits. Does his housing allowance count against the 2014 earnings limit of $15,480 for individuals who work while collecting Social Security?

Answer:

The Social Security Administration (ssa.gov)  does not specifically address this issue in its handbook. However, Sec. 1811 of the handbook includes both "all work for pay" and "all net earnings from self-employment" as items that count against the earnings limit. Since housing allowance is clearly included in net earnings from self-employment, it is considered income for purposes of the earnings test.

A second issue arises for ministers who have "opted out" of Social Security but are collecting based on non-ministerial earnings. If they have not opted out, housing allowance will certainly affect the earnings limit, so it seems inappropriate for those who have opted out to exclude housing allowance in reporting to the SSA without clear exceptions to cite. However, the SSA website provides little guidance as to the method of reporting a housing allowance by those who have opted out. Those ministers are not required to report SE earnings on their tax returns, which is the basis for the SSA to conduct its earnings test, as indicated by Sec. 1819 of the Social Security handbook.

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A church rented space from another church last year. Should it request a completed Form W-9 and issue Form 1099-MISC?

Answer:

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