Earned Income Credit and Housing Allowance

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Question:

For purposes of the Earned Income Credit (EIC), is housing allowance considered to be part of earned income?

Answer:

According to the IRS, "The rental value of a home or a housing allowance provided to a minister as part of the minister's pay generally is not subject to income tax but is included in net earnings from self-employment. For that reason, it is included in earned income for EITC, unless you have an approved Form 4361."

This statement is part of IRS Publication 596 which goes on to say,

"Form 4361.
Even if you have an approved Form 4361, amounts you received for performing ministerial duties as an employee count as earned income. This includes wages, salaries, tips, and other taxable employee compensation. A nontaxable housing allowance or the nontaxable rental value of a home is not earned income [our emphasis]. Also, amounts you received for performing ministerial duties, but not as an employee, do not count as earned income. Examples include fees for performing marriages and honoraria for delivering speeches."