@bchris79 wrote:
@Opus 17
I'm the senior pastor and only person receiving monetary compensation. I don't received much. The amount I got approved for housing allowance is 100% what I get every year. I don't get a w-2. May I declare 100% housing allowance on a schedule C in Turbo Tax? and May I declare "business expenses" on that same Sch C? or where do I report my unreimbursed expenses?
You can't deduct business expenses on schedule C if your only compensation is a housing allowance. You can't deduct business expenses because of the Deason rule--if your income is not subject to income tax, you can't reduce your income with work-related expenses.
However, you can use your unreimbursed expenses to reduce your income subject to self-employment tax on schedule SE. This is separate from work-related expenses on schedule C.
You still need to use Turbotax self-employed if you are filing online. Start by creating a business, and using occupation code 813000. This is the clergy code and will trigger a question about your housing allowance, which will be put on schedule SE but not schedule C. You won't actually have any income or expenses on schedule C, although the program will probably create one with all zeros.
You can reduce your housing allowance by your unreimbursed expenses. If you are using TT online, there may be a new question to allow this in the interview (there didn't used to be). Or you can use the desktop program and make a direct entry on line 5c of the Schedule SE Adjustment Worksheet. And I really think you can just reduce the amount of housing allowance you enter the first time, since the IRS only gets the final number.
However, the IRS says that if you reduce your SE income by your expenses, you must file by mail and attach a statement showing your expenses and the calculation. Since mail filing is such a mess lately, you will probably be better off e-filing, but you will need to keep all your documentation for at least 3 years (6 is better) in case the IRS asks for the details of your housing allowance and your expenses.
