Are qualified clergy housing allowances included in gross income?

Qualified clergy housing allowances are excluded from gross income. This exclusion is based on the provisions in the Internal Revenue Code that allow ministers and other religious leaders to receive a housing allowance that is not subject to income tax. This means that any amount designated as a housing allowance, as long as it is used for housing-related expenses, such as rent or mortgage payments, utilities, and maintenance, does not need to be reported as taxable income.

The rationale behind this tax treatment is to recognize the unique role of clergy and the additional financial responsibilities they may carry, such as navigating housing needs relevant to their ministerial duties. Therefore, the amount received as a housing allowance—if it meets specific qualifications—cannot be included in gross income, providing a financial benefit that acknowledges their service to the community.

In contrast, the other options imply varying levels of taxability, without acknowledging the full exemption that exists for qualified housing allowances, which makes the selected answer accurate.