We have all been watching the outcome of the 2017 lawsuit in Wisconsin that challenged the constitutionality of the minister’s housing allowance. In March of this year, the Seventh Circuit reversed the lower courts decision, upholding the ability to pay a minister a housing allowance.
While some believe that there will be more lawsuits in the future, for now ministers can continue to reduce federal and state income taxes by having the church board approve a housing allowance. The resolution should be in writing, for a specific dollar amount, and must be designated in advance (you cannot make a retroactive resolution).
Now is a good time to review your housing allowance to see if any adjustments are needed for the last half of the year. We also recommend that you include the following language in the resolution “Be it resolved, that this housing allowance designation shall apply to calendar year 2019 and all future years unless otherwise provided.” This allows one resolution to cover future years and protects the loss of the tax benefit should the board forget to approve the allowance annually.