September 08, 2014

Housing Allowance and the Premium Tax Credit



Question:

Am I supposed to include my minister’s housing allowance when determining household income for the Health Insurance Premium Tax Credit?

Answer:

Per final regulations issued by the IRS and Department of the Treasury on May 18, 2012, household income is calculated as follows.[i]

Taxpayer’s adjusted gross income (AGI)
+All Dependents’ AGI (if required to file a tax return)
+Foreign earned income excluded from AGI
+Tax-exempt interest
+Social Security Benefits not included in gross income
Modified Adjusted Gross Income

The above calculation does not include an adjustment for housing allowance; therefore, the minister’s housing allowance that is excluded from federal tax is also excluded from household income for purposes of the Health Insurance Premium Tax Credit.

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