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How is the difference between the designated housing allowance and the lower of the three amounts handled?

April 26, 2017allowance amounts designated difference handled HOUSING lower

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How is the difference between the designated housing allowance and the lower of the three amounts handled?

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• If the allowance exceeds the lower of the actual expenditures or the fair rental value: the pastor needs to include the difference on Form 1040 as “other income.” • If the actual expenditures or fair rental value exceed the allowance: the difference cannot be taken as an additional deduction on the pastor’s tax return. It is lost.