@jup
A lot of the previous answer is now out of date, because the 2019 date on the topic is the date it was imported into the new forum platform and not the date it was originally posted.
First, when entering a clergy W-2, there is a box to check for “religious Wages” on a page of special circumstances following the main W-2 screen. This will bring up a page to enter information about your housing allowance, and indicate how the housing allowance should be taxed. Most of the time, you are required to pay self-employment tax on both the housing allowance and your taxable income. The other choices in the program are there for special circumstances that I can explain if they are necessary to you. In general, you would check the box for “pay tax on both“ and then you will pay self-employment tax on your housing allowance and your taxable wages and you will only pay income tax on your taxable wages.
Second, W-2 employees can no longer deduct work related expenses on form 2106, because that deduction was eliminated in 2017 for tax years 2018 through 2025.
Third, clergy are still allowed to deduct work related expenses from their income subject to self-employment tax, even though they can’t deduct expenses from income subject to income tax. In TurboTax, this requires a manual entry on line 5c of the schedule C adjustment worksheet, which the program will carry over onto schedule C. The worksheet is only directly accessible if you are using TurboTax installed on your own computer and you switch to Forms mode. The worksheet is not addressable through TurboTax online.
Fourth, there may be a way to enter clergy expenses directly in the interview, bypassing the need for a manual entry on the schedule C adjustment worksheet. I have seen this talked about but I have not tested it myself yet. If it is there, it is a recent change to the program. I won’t be able to test it until tonight at the earliest, but if you keep your eyes open you may spot it.
Fifth, if you enter clergy expenses as an adjustment to your schedule C income, you must adjust your expenses according to the Deason rule and you are supposed to attach a written work sheet explaining your expenses and how you made the adjustment. It sounds like you already understand this rule, but post a new comment if you want more explanation. TurboTax does not allow for the attachment of a PDF in this situation. (TurboTax is very limited in the attachments that are allowed, due to IRS restrictions on the ability of consumer level software to add free form explanations, because they might cause problems in the IRS computer systems. Tax professionals have much more ability to add attachments.)
If you have Deason rule adjustments to make and you want to e-file, I suggest that you could e-file without providing the adjustments but keep them in your records for at least three years in case the IRS asks to see them. Or, you could pay extra to have your taxes filed with a professional who can include the attachments. Or, you could file by mail, but you have correctly indicated a very good reason to avoid that.
