@landress1999 wrote:
We live in a parsonage rent free as a part of my husband's ministry position. The church also has set aside a housing allowance in our salary to cover utilities. The housing allowance is listed on line 14 of our W2. I know I need to somehow include the fair rental value of the parsonage, but this is not listed on line 14 of our W2. How do I include the housing allowance AND fair rental value in turbotax?
I suggest entering the "fair rental value" in the first box and the "housing allowance for utilities" in the 2nd box.
@landress1999 @DMarkM1 This answer is incorrect.
If the clergy person receives both a rent-free parsonage and a separate cash allowance for utilities and other expenses, then the "housing allowance" provided by the church is the fair market value of the parsonage PLUS the cash amount, and the entire amount is subject to self-employment tax.
The fair market value of the parsonage is what it would cost to rent a similar house in the same neighborhood in similar condition. Normally, the church is required to determine that and provide the information to the pastor. A real estate agent might give an opinion, or you could check Craigslist and other sources.
For the first value, "housing or parsonage allowance", enter the total of the FMV of the parsonage plus the cash allowance. For the second value, "qualified housing expenses," enter the total of the FMV of the parsonage plus the expenses for utilities and other qualified housing expenses (but the second value can't be larger than the first value, only less than or equal to.)
