Is my pension benefit taxable?
Generally, yes, but you may exclude the portion of your pension that you use for housing expenses from your taxable income.As provided by the Internal Revenue Code, the Church Pension Fund has designated the full amount of each pension to retired and disabled clergy as eligible for the housing allowance, This amount includes the 13th check, resettlement benefit, and the ""bridge""payment (if applicable),
The amount of housing allowance you may exclude on your Federal income tax return cannot exceed the lowest of:
- The total amount you actually spend in the year for items that directly relate to renting or providing a home, or
- The fair rental value of your home (including garage, furniture, and appliances) plus the cost of utilities, or
- The pension benefit received.
The resettlement benefit, payable upon retirement, is considered to be part of your pension for income tax purposes. As such, it is also included in the amount designated as housing allowance. Therefore, the limits set forth above pertain to the regular pension and the resettlement benefit in the year received.
The housing exclusion applies only to ordained clergy and ends when you die. It is not available to surviving spouses or dependents.