Colorado FAMLI and clergy housing

If you operate a church or religious entity in the state of Colorado, and provide a housing allowance to your clergy or other employees as a fringe benefit, the value of this benefit is subject to Colorado FAMLI tax. OnPay can help you account for this fringe benefit so that Colorado FAMLI withholdings and contributions are automatically calculated with each pay run.

What is clergy housing?

When a church or religious entity provides housing to its employees who are clergy (defined as a person ordained for religious duties), the value of this fringe benefit is still considered income, but is generally excluded from subject wages when calculating income tax. However, this income may still be subject to FAMLI tax contributions, when paid as a housing allowance.

This benefit may be provided in one of two ways:

• Fringe: Housing allowance paid as wages
• Imputed: Provided living space that's owned or paid for by the religious entity 

When is clergy housing subject to FAMLI tax?

For religious entities who pay a housing allowance to clergy living in Colorado, this fringe benefit is subject to employee withholding and employer premium payments toward the Colorado Family and Medical Leave Insurance (FAMLI) program. OnPay allows you to add a "Clergy Housing Fringe" pay type for this allowance, which includes it in subject wages for FAMLI tax contributions, but does not include it in subject wages for any other tax. 

How to add a clergy housing pay type to an employee's pay

It's important to use the Clergy Housing Fringe pay type when paying a housing allowance to clergy in Colorado, so that FAMLI tax withholdings and premiums are correctly calculated and paid. If you need to include the imputed value of provided housing, there's a pay type for that, too. We'll cover both in this section.

In OnPay, go to Payroll.

Find the clergy employee in the list, and click the edit pencil beside their pay in the "Wages" column.

If "Clergy Housing" doesn't appear in the "Pay Type" column for this employee, you'll need to add it. To do this, click Add/Order Pay Rows.

Click Add Row.

Search for "clergy" in the Pay Item menu. 

There are two options for "Clergy Housing" for you to choose from: "Fringe", and "Imputed". While all clergy housing is a fringe benefit, at the top of this article, we discussed the two ways this benefit may be provided to the employee:

• Fringe: Including a housing allowance in their regular wages (subject to FAMLI taxation)
• Imputed: Providing access to a living space that's owned or paid for by the religious entity (not subject to FAMLI taxation)

Fringe benefit IS subject to FAMLI taxation

If you're including a housing allowance in their regular wages, select Clergy Housing Fringe.

Imputed benefit IS NOT subject to FAMLI taxation

If you're providing optional access to a living space that's owned or paid for by the religious entity, select Clergy Housing Imputed.

Recurring Amount

Both options will provide a field for you to enter the dollar value of this benefit under "Recurring Amount". If you chose "Clergy Housing Fringe" in the previous step, the amount you enter here will be included in subject wages for FAMLI tax contribution calculations with each pay run. If you chose "Clergy Housing Imputed", the amount you enter here will not be included in subject wages when calculating FAMLI tax. 

Click Add to save this pay item for this employee.

Once added, the "Clergy Housing" pay type is listed at the bottom. You can rearrange and remove pay types in this list as needed. When you're finished adding the pay type, click Done.

You will now see the recurring amount you entered listed as "Other Earnings" under "Wages" for this employee with each pay run. You can click the edit pencil at any time to change or remove this amount.

You can also click the toggle to exclude/include this pay type from a pay run without removing it. This is especially helpful when processing an off-cycle or special pay run, like a bonus or reimbursement. 

How to confirm this fringe benefit is being taxed correctly

If you wish to confirm that this fringe pay is only subject to FAMLI tax, and not subject to any other income tax, click Preview Check.

Under "Withholding Taxes", the subject total for Colorado Paid Family and Medical Leave is higher than other withholding tax totals, because it includes the recurring amount entered for this pay type.

Our Tax Accuracy Guarantee

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However, because we file on your behalf using information provided by you, it's important that you provide and input accurate information about your company, its employees, and the states and districts in which they live and your business operates, including all IDs and tax rates. Our Tax Accuracy Guarantee picks up where you leave off by covering all our calculations, and the filings and payments we base on them.

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