Recently, several requests were forwarded to the Office of Institutional Chaplains related to what is called a housing allowance. Clergy can designate a portion of their income to be designated as housing allowance, to cover housing expenses. This portion of income is not subject to income tax, but is included in social security tax computations.
Some lay chaplains have been offered housing allowances by their institutions, either as residents or in employment. The question they have raised is whether this offer can be accepted?
In seeking to respond to these inquiries, our most recent OCA Treasurer, Melanie Ringa was contacted. She has served in this capacity for many years and is knowledgeable about OCA offices and departments. She shared the response, following below, that is being publicized to prevent chaplains from finding themselves out of compliance with the Internal Revenue Service. Before turning to her detailed response, the summary is that even though laypersons in the OCA are commissioned for ministry, since they cannot perform sacraments, or lead our liturgical worship, they do not fit the IRS definition of ministers that can designate a portion of their salary. The details of her response follow:
In IRS Pub 517, ministers are defined as:
"Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination. If a church or denomination ordains some ministers and licenses or commissions others, anyone licensed or commissioned must be able to perform substantially all the religious functions of an ordained minister to be treated as a minister for social security purposes.”
According to Melanie Ringa: “It is these individuals [defined above as ministers] who are eligible to designate part of their compensation as Housing Allowance. In the Orthodox Church, all commissioned chaplains are NOT allowed to perform sacraments, and therefore are CLEARLY not eligible for housing allowance. The OCA would not recognize housing allowances for laypeople. Their compensation is considered regular and taxable for both IRS and Social Security/Medicare tax purposes.”
For our lay chaplains, if you are offered a housing allowance by your institutional setting as part of your salary package, either as a resident or employed in a chaplain role, you need to decline this offer and have your compensation fully identified as regular income. If helpful, you can forward this brief statement to your employer.