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Clergy housing allowance Generally, the housing allowance is reported in Box 14 of the W-2 and is not included in Boxes 1, 3, or 5. The fair rental value of a parsonage or the housing allowance can be excluded from income only for income tax purposes. No exclusion applies for self-employment tax purposes.
There are no standard amounts for housing allowance as a whole. The IRS guidelines say to use the fair market rental value of your housing and housing expenses (i.e., gas, electric, cable, etc.). There are housing allowance worksheets to help pastors figure out the best amounts for their individual needs.
Many Churches Use It The majority of senior and solo pastors in the United States receive a housing allowance.
For example, if Pastor Al had $30,000 designated as housing out of his pay, spent $10,000 on housing expenses, and had a fair rental value of $40,000. $10,000 is the lesser of the three. He can exclude $10,000 from income tax calculations. The rest is added when calculating income tax.
This is 7.65% of the pastors cash salary and housing, regardless of whether the housing is provided in the form of a housing allowance or in the form of a parsonage with utilities paid by the church. The Social Security allowance is considered taxable salary when reporting income to the IRS on W-2 form.
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People also ask

How to Determine Housing Allowance The total housing allowance designated by their church (or GuideStone for retirees) Actual housing expenses (including mortgage payments, utilities, insurance, improvements, furnishings, etc.) The fair rental value of the home (furnished, plus utilities)
What Expenses Can Clergy Staff Use to Justify the Housing Allowance Exclusion? Rent, principal payments, or down payments plus the cost of buying the home; Taxes and mortgage interest (even if these are includable as itemized deductions); Utilities (heat, electric, basic telephone, water, etc.);