Assembling a housing allowance packet through the year takes minutes. Assembling it in April takes a weekend. This is a short list of what to gather so your tax preparer or church treasurer can handle your housing allowance quickly and accurately.
Educational information, not tax advice. Your preparer may ask for more or less depending on your situation.
Full disclaimerThe hand-off packet
1. The designation. A copy of your church's written housing allowance designation for the year, showing it was adopted before the payments it covers. Publication 517 says the designation can be shown in an employment contract, church minutes, a budget, or another official action taken in advance of payment. If you need to set next year's, see how to designate your housing allowance.
2. Expense summary. A categorized total of your housing expenses for the year: mortgage or rent, property taxes, insurance, utilities, repairs and maintenance, furnishings, and yard care. Keep the underlying receipts and statements available if your preparer asks.
3. Fair rental value estimate. Your written estimate: the comparables, adjustments, furnishing percentage, utilities, reconciliation, and date. See fair rental value for clergy for what belongs in it.
4. Utilities total. Broken out separately, because fair rental value includes utilities.
5. Any changes during the year. Moved, refinanced, major renovation, a new designation partway through the year. A one-line note on each is enough.
6. Your W-2 and how the church reported the allowance. The housing allowance is generally left out of the taxable wages in box 1. Ask the treasurer whether the church also shows it in box 14 or on a separate statement, and give your preparer that number so it can be matched to the designation.
7. Last year's figures, if you have them, for comparison.
Why these three numbers
The exclusion is limited to the smallest of your designated amount, your actual housing expenses, and the fair rental value of your home. Your preparer will compare all three, so having each one documented in advance saves them digging. Our guide to how the limit works explains the comparison.
How to make it a five-minute job
Keep the record as you go. If your expenses are logged and categorized all year and your fair rental value estimate is already written up, the packet is just an export. In Housing Allowance Helper that is the CSV or printable report from the dashboard, which already shows the three figures side by side along with the expense detail. Attach the designation and the fair rental value report and you are done.
Checklist to send
- Written designation, dated before the payments it covers
- Categorized expense summary, with receipts available
- Fair rental value estimate with reasoning
- Utilities totaled separately
- Notes on any mid-year changes
- W-2, plus how the church reported the housing allowance
- Prior-year figures (optional)
Sources: IRS Publication 517 (opens in a new tab); Internal Revenue Code section 107.