If you are an eligible retired Minister for Tax Purposes, you may ask GuideStone to designate all or a portion of your retirement income as a housing allowance. A housing allowance can be designated for a payment only when that payment relates to contributions made as a result of earnings from service as a minister. If you designate a percentage, the amount designated as housing allowance will automatically increase if your income amount increases.
You must decide if you are a Minister for Tax Purposes and how much you can exclude from income as a housing allowance. If you are eligible for a housing allowance, you can exclude from your gross income the least of these three amounts, subject to IRS rules: (1) the designated amount; (2) your actual eligible housing expenses; or (3) the annual fair rental value of your home, furnished, including utilities. You are responsible for documenting these expenses.
If you ask GuideStone to designate more than you can exclude from income as a housing allowance, you must report the excess to the IRS. Ministers who receive retirement income payments but continue their service in the ministry will have to pay SECA taxes on the part of their retirement income that is designated as housing allowance. Ministers must comply with other IRS rules about the housing allowance.
If you have any questions about these rules, please consult your own tax advisor. You can make or change a housing allowance designation at any time by contacting GuideStone and requesting a form to do so.
All requests for changes will apply to future retirement income payments only and cannot be retroactive.
You can also find more information in our brochure, Ministerial Tax Issues. Contact us for a free copy.