By Warren Mathews 9/30/08
Approved by the Board of Directors , 10/15/08

Background
All ordained minister employees are entitled to receive a portion (or all) of their compensation as a Housing Allowance that is potentially exempt from income taxation (see the document “Payroll and Payroll Tax Accounting for Ministers” by Warren Mathews dated August 22, 2008). This “allowance” is not additional compensation to the employee, but rather is simply a designation of a portion of what would otherwise be called salary. Such designation is made at least annually by Resolution of the Board of Directors.

The amount the Church designates as housing allowance is at the option of the employee, up to (but not exceeding) the Church-established total compensation for that employee, and it can be changed at any time at the option of the employee. The only limitation on such designation and subsequent modification is that the housing allowance cannot be applied retroactively. That is, allowable housing expenses incurred by the employee are tax-exempt only to the extent of the housing allowance that has been designated as of the time the expenses were incurred.

Procedure
Based on input from each ordained employee, the Board approves a resolution each December, establishing the amount of that employee’s compensation for the following calendar year (tax year) to be designated as a housing allowance. The Board approves an amending resolution at any time the employee wants either to increase or decrease the housing allowance for that calendar year.