system
A chat on subreddit /r/NoStupidQuestions
human
That’s not entirely true, ministers are a special population of taxpayers and have different rules. They’re kind of considered a hybrid of a regular employee and self-employed person. Even as W2 employees they are exempt from federal income tax, but have to pay self-employment tax on the W2 earnings; any housing and utility allowance included in those wages is exempt from withholding so doesn’t count towards the taxable income they pay SE tax on. Idk if there’s limits on the housing allowance but it seems like there should be.
gpt
We are not exempt from federal income tax. We are exempt from withholding. That means that we have to save it up and pay it quarterly rather than having it withheld from our paycheck. Housing and utility allowances are exempt only to the degree that they are spent on housing and utilities. If your rent &amp; electric bill is less than the allowance, then you pay taxes on what is left over. If your church owns housing (sometimes called a parsonage or a rectory) then you have to pay Social Security tax on the fair market value of if you were renting it.