Some basic rules for housing allowances for ministers:
- The housing allowance must be officially designated before the compensation is received and the declaration should come from the payer, not the recipient.
- The housing allowance is not including in gross wages on the W-2 or 1099, but it should be noted in box 12 of the W-2 or an additional statement accompanying the 1099. The reason is because this income is subject to self-employment tax.
- Housing allowances are not subject to income tax, but they are subject to self-employment tax.
- Note that if you are exempt from social security taxes, then housing allowances are free from any taxation.
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