If you are clergy, your pension benefit is taxable in most cases, but you may exclude the portion of your pension that you use for housing expenses from your taxable income (subject to IRS requirements).
The Church Pension Fund designates the full amount of the benefits paid to retired and disabled clergy as eligible for the housing allowance exclusion, as provided by the Internal Revenue Code. This amount may include:
- Monthly pension (or disability) beneﬁt
- Christmas Beneﬁt (13th check)
- Resettlement beneﬁt
- "Bridge" benefit provided to eligible retirees under age 65
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,
- the fair rental value of your home, plus the cost of certain utilities, or
- amount of the housing allowance approved by your vestry.
Please consult your tax advisor for further information.
The housing allowance exclusion applies only to ordained clergy and ends when they die. It is not available to surviving spouses or dependents.