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Ministers and religious leaders can be found everywhere. These religious leaders are there to provide guidance to individuals who seek advice. Usually if there is family crisis, the family will go to these religious leader to help them get though it and hopefully find solutions. It seems that everywhere you look there is a minister from one religion and another religion. For federal tax purposes a minister may be exclude from the income the fair rental value of a home or housing allowance plus utilities provided as compensation for his or her ministerial services. The minister needs to report the income received from the religious organization for his or her services. If the minister is self employed, he or she can file an application so that he or she does not have to pay social security tax on his or her self employment income. In order to qualify for this exception, the individual must be opposed to certain public insurance for religious or conscientious reasons but not for economic reasons. This can be done by filing IRS Form 4361.

The Franchise Tax Board also allows for the housing exclusion. The member of the clergy or minister can exclude the rental value from income of a home furnished by religious worker’s employer or the rental allowance paid as part of the minister’s compensation that is to be used to provide the minister a home. California also allows for the exclusion of the clergy’s rental allowance from income. When federal only allows the exclusion up to the fair rental value of the home, California allows any amount necessary to provide such housing. California does not limit the exclusion as federal does. If you claimed a housing allowance on your federal tax return and you were not able to claim the entire amount because it was limited by the fair market value of the housing, enter the difference on Schedule CA. Enter this amount that was in excess of the federal permitted amount on California Schedule C, line 7 Column B. Ministers are very business individuals and it only makes sense that they get some tax breaks on their housing situation. The clergy or ministers get tax breaks when it comes to housing issues.

Some religious workers or clergy are stated-employed. Allowance for state-employed clergy is a little different. Starting January 1, 2003, up to 50% of gross salary may be allocated for either the rental value of a home or the rental value allowance provided to rent a home. If the amount of the federal exclusion for members of the clergy is less than the California allowable amount, enter the difference on Schedule CA, line 7, column B. Likewise if the amount of the federal exclusion is greater than that of California enter the difference on Schedule CA line 7, column C. California has limits set for exclusion of the rental value of state-employed clergy and it looks like they are less of a benefit than what federal tax law allows.

Merchant seamen and others such as rail carriers, motor carries, and air carriers are in a special classification for federal tax purposes. If you are a nonresident of California, you may exclude from your income compensation for the performance of duties of certain merchant seamen. If you are nonresident of California, you may also exclude from your gross income compensation of an employee of a rail carrier, motor carrier, or air carrier. In preparation of a tax return for a nonresident employee of merchant seaman, rail carrier, motor carrier, or air carrier, enter any amount which you included in federal income which does not qualify for the California exclusion on Schedule CA of Form 540NR, line 7, column B.

Certain individuals need special care and more often require their caretakers to live with them in the home. In-home supportive services (IHSS) supplementary payments are payments funded by the government for in home care of certain individuals. This is one of the jobs that takes a very special and patient person to perform. The question of “difficult of care” makes these payments received by qualified care facilities nontaxable for federal tax

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