APPENDIX

How to Calculate Your Housing Allowance
The Housing Allowance permits you, as an ordained minister, to shelter that part of your income that provides for your housing expenses. The Housing Allowance Worksheet (Appendix 21) will assist you in calculating the appropriate amount of your salary that can be designated as Housing Allowance. IRS Publication 517 and the references given should answer any IRS questions you may have.

Becoming Exempt from Social Security
As a minister you are considered a dual status employee. This means that you are considered self-employed in the performance of ministerial services for Social Security purposes and yet the IRS considers you an employee for tax purposes.

Form 4361 includes a statement that, because of your religious principals, you are conscientiously opposed to accepting, for services performed as a member of the clergy, any public insurance (government insurance that makes payments in the event of death, disability, old age or retirement). This includes public insurance established by the Social Security Act. Your conscientious opposition must be based on your individual religious beliefs. Opposition based on general conscience or for financial reasons will not satisfy this requirement. This is a decision that must be thought through carefully and the decision must be done prayerfully.

The application for Exemption from Self-employment Tax (Social Security), Form 4361, must be filed by April 15th or if you have an extension, that date, for the second tax year in which you had net self-employment earnings of $400 or more from services as a minister (which includes housing allowance). If this date is missed you have lost your opportunity forever. I suggest that you read the appropriate sections in Income Tax Guide for Ministers and Religious Workers by B. J. Worth and Business Management in the Local Church by Pollock.