With rising inflation, all of us have experienced prices rising on most everything over the past few months, including housing expenses (rent, mortgage rates, utilities, furniture, etc.) Credentialed leaders are afforded a clergy housing allowance through the federal government which allows them to exclude housing expenses from their gross income. These allowances are set annually by your congregation or governing board. With the current financial climate, you may be asking, can I change my Housing Allowance to reflect the current increases in my housing costs?
The answer is yes, with the following rules:
- Changes may be made to a Clergy Housing Allowance for the remainder of 2022. You cannot change the Housing Allowance for any period already past, but you can change it for the rest of the year.
- The same authority (e.g. Church board) that set the Housing Allowance at the beginning of the year needs to be the same authority that changes it.
- The change needs to be duly recorded in the minutes of that authority’s meeting when the change was approved.
Some churches establish a maximum amount that their credentialed leaders may utilize as a Housing Allowance for a given year. If the credentialed person decides to increase the amount of their housing allowance for the remainder of the year (and it is less than the approved maximum amount), the person may change it without further approval.
For more information regarding a Clergy Housing Allowance, please see this article, “Did you Know?” on the Mosaic website. For further questions, we encourage you to contact an accountant familiar with the IRS’s Clergy Housing Allowance.
Increase in IRS Mileage Rate
Due to recent gas prices, the IRS recently announced an increase to the business mileage rate, beginning July 1, 2022. As of July 1, the mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate effective at the start of the year. For more details, please see the IRS website.