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Tax Law (Questions About Taxes)/Clergy - payoff house in lieu of salary


My husband is a full time clergy and has not recieved a salary in the last 2 years.
In lieu of a salary,  the church elders would like to pay our mortgage loan off.
The payoff amount is $68000.  We also recieve $3000 in a combination of retirement and
Social Security.  Will we still have to pay taxes?  What is the best way to recieve this payment for tax purposes?
Thank you.


Thanks for your question.

There will be some tax and how much depends on how it is structured.  

The church can designate an amount as housing allowance.  This must be done for the year in question in advance.  Any amount designated as housing allowance will not be subject to income tax but will be subject to self-employment tax.  The maximum amount that can be designated as housing allowance is the fair rental value of the house plus utility costs.

Any amount not designated as housing allowance is taxable and subject to income and self-employment taxes.

Retirement income and social security are subject to income tax.

Hope this helps.

John Stancil, CPA

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John Stancil, CPA


I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at I also offer seminars and consultations to churches and clergy on their tax issues at Also visit my blog, I am listed on Tax Connections at Prepare and file your own taxes at


I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

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The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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