I don’t know if you have been following the story about the challenge to the clergy housing allowance made by Freedom From Religion Foundation (FFRF) but this case has been going on for a few years and a federal court has ruled that the clergy housing exclusion is unconstitutional.
Even though this decision will probably go to appeal, it is a big concern for the men and women who work in a clergy capacity.
This decision will have a direct impact on the income of members of the clergy who currently take advantage of the tax breaks associated with the clergy housing allowance. Many of these men and women sacrifice a lot of financial benefits for the sake of their calling.
What you can do to help those who may be impacted?
Share the recent developments and educate anyone who might be affected by this ruling on the history of this challenge so they are informed. Assign someone to following the developments of this so information can be shared as this progresses. This step will help prepare them and avoid a bad surprise about their tax situation.
Solicit help from your accountant and review each person’s individual situation to see how this change will impact them financially. Since it’s the end of the year, it might be an opportunity to make some withholding adjustments. Knowing what to expect will help with the transition and will take the stress of not knowing the financial impact of this ruling. This will give them time to plan and make financial adjustments.
3. Salary Review
Meet with the compensation committee of the board and see if there can be salary adjustments made to help bridge the gap. Since most churches are going through their budgeting process now through the end of the year, this is a good time to have that conversation.
4. Talking Points
Prepare talking points for the employee to share with their family. Since this could have a major impact on tax implications, help the clergy explain the change to their family by providing them with information to share.
This ruling will only impact clergy who use the housing allowance and not those who reside in a church owned parsonage.
photo by: nwrdc