Believe it or not, many churches today do not know or understand how to help their ministers with tax matters. For example, some have no idea what a housing allowance is. If they’ve heard of it, they don’t know how or why to designate one.

Yet, every church should be prepared to offer Tax Help for Ministers in one form or another. It really isn't that hard. A housing allowance, for example, is nothing more than the church’s act of identifying part or all of a minister’s salary as the amount that is to be used to provide the minister a home. That home can be owned by the church (in which case it's a parsonage), or it can be owned or rented by the minister.

It would have taken a competent church administrator all of five minutes to learn that and also learn how to designate it. Of course, it's important you know where and how to find that information. And you must also be careful about the information you trust.

Not all is as it seems in the world of online information relating to starting, advising and protecting churches and ministers. Plenty of savvy entrepreneurs abound who merely see the church-starting arena as a "niche" to be exploited. But when you look closely at their credentials... well, let's just say they leave a lot to be desired.

Do you really believe that just anyone will understand some of the more obscure, though highly important aspects of ministry tax matters? Can just anyone tell you that the housing allowance started out as a “parsonage” allowance, which required that the church own the home? And that it all changed in 1954 when Internal Revenue Code Section 107 was amended to included a home rented or owned by ministers? The answer is a resounding "NO!"

Therefore, it's important you know who to trust when getting your information on Tax Help For Ministers. For example, it's also important to know that Section 107 applies to minister in one of 4 ways. However, in each case, the compensation received must be for ministerial services.

First, the church may provide a minister with a completely maintained “parsonage” (an actual physical home) to live in, including furnishings, utilities and upkeep. The parsonage itself is considered compensation for ministerial services.

Second, the church may provide a minister with a parsonage and additional compensation which is used to pay all parsonage-related expenses, such as furnishings, utilities, and upkeep, where the minister pays for the furnishings, utilities and upkeep.

Third, a minister may rent a home or apartment. In that case, the church should designate in advance a “housing allowance” to cover the annual fair rental value of the minister’s dwelling and to pay rental expenses for things such as furnishings, utilities, upkeep and even renter’s insurance.

And fourth, if the minister is paying the mortgage on a home, the amount of compensation he receives from the church, which should be designated in advance as a “housing allowance,” need not be included as taxable income. But this is true only to the extent that the designated amount is actually used to provide a home and housing related expenses.

There are so many others things to know about how to provide Tax Help For Ministers. The IRS has indicated at least four special tax benefits available to clergy.

If God has called you to start, or help start, a church and you're looking for the best resource for how to accomplish that, and how to help ministers with tax matters, you can't go wrong with...

Building On Faith: Everything You Need To Know About Starting Your Own Church

Written by Abe Hernandez, Esq., a devoted Christian and church law expert, Building On Faith is the gold standard in use today throughout the country. Hundreds of churches have benefited from Mr. Hernandez's wonderful Church-Starting resource.