Purchases of furniture and appliances for parsonage

by Marcus n Texas
(Texas)

Our church provides a parsonage for the pastor's family and also pays the pastor a housing allowance. If the pastor uses a portion of the housing allowance to purchase furniture and appliances for the parsonage, when that pastor leaves, who owns the furniture and appliances purchased with the housing allowance?

If the pastor has claimed the money used for those purchases as earned income, wouldn't the furniture and appliances become his / her property?

However, as a member of the church's finance committee, how would I be able to know whether or not the money used to purchase those items has ever been shown as income when the pastor filed his income tax return?

Comments for Purchases of furniture and appliances for parsonage

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Sales tax/parsonage pool remodel
by:

Hello freechurchaccounting,

I am the owner operator of a small home based business in the pool and spa industry. My question is regarding a recent job. I was hired by a pastor in the state of Indiana to rehabilitate his I/G pool at his residence I'm unsure if the house/pool are owned by the church or the pastor how much he gets towards parsonage or repairs if it is. All I know is contract is in his name but he paid majority of deposit with a church check. I'm under the impression that material & labor purchased not for the
Use within the ministries are taxable under state sales tax laws. So since the pool isn't for church usage directly.but may be on property or paid for with parsonage allowance. That leaves me confused I think tax applies but I'm not sure and don't wanna do the wrong thing. Thanks in advance.
Housing Allowance for part time ministers
by: MarcusNTexas

Our 3/4 time Youth Minister has recently been ordained into the ministry. In addition to paying a housing allowance for our full-time pastor, can we now also pay a housing allowance for the newly ordained, 3/4 time Youth Minister? This assumes, of course, that our Stewardship/Personnel Committee makes such a recommendation to the full church which would then be voted on at the next regularly scheduled business meeting of the church. Our plan is to take a portion of the Youth Minister's base salary and convert it into a Housing Allowance if it is approved.
Response I was wanting
by: MarcusNTexas

Vickey....thanks for your response to my inquiry regarding use of the housing allowance to purchase appliances and furniture. Your response was exactly what I was hoping that it would be. Thanks again!
Furniture and Appliances Belongs to the Pastor
by: Vickey

The furniture and appliances belong to the pastor if purchased with any of his funds.

A housing allowance is simply a portion of a minister’s compensation.

It is based on his projected housing expenses; however, a church does not have the legal right to inquire if a minister actually spent the allowance on housing expenses during the year. It is the minister’s responsibility to track his housing expenses and report the appropriate amounts as eligible housing expenses and income.

A housing allowance amount is exempt from federal income taxes, but not from self-employment taxes (Social Security) unless a minister has filed a Form 4361 and been approved to opt out of social security.

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