Special tax exemptions for preachers
Geez . . . why do preachers get this special tax deduction, and the rest of us mere mortals don't?
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http://www.irs.gov/faqs/faq4-10.html
A minister receives a salary plus a housing allowance. Is the housing allowance income? Where does the minister report it?
A minister's housing allowance, sometimes called a parsonage allowance or a rental allowance, is excludable from gross income for income tax purposes, but not for self-employment tax purposes.
If you are a minister and receive as part of your salary (as a minister) an amount officially designated as a rental allowance, you can exclude from gross income the amount that is used to provide or rent a home. However, the exclusion is limited to the lesser of the fair market rental value (including furnishing, utilities, garage, etc.) of the amount officially designated (in advance of payment) as a rental or housing allowance, or the actual amount used to provide a home, and cannot exceed what is reasonable pay for your services. The payments must be used in the year received.
If housing is furnished to you by your congregation as pay for your services as a minister, the exclusion cannot be more than what is reasonable pay for your services, and is limited to the fair market rental value (including furnishings, utilities, garage, etc.) of the home.
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There are some members of religious orders, ministers, and Christian Science practitioners who have requested and been granted exemption from self-employment tax.
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