Deductions & credits

Generally, those expenses include rent, mortgage interest, utilities, and other expenses directly relating to providing a home. The amount excluded can't be more than reasonable compensation for the minister's services.

Pastors living in a furnished parsonage provided by their church can still claim a housing allowance for other home costs. These include things like home maintenance, repairs, utilities, and furnishings.  The exclusion cannot be more than the reasonable pay for your services.

To enter your housing allowance follow the steps below:

To enter your parsonage or housing allowance on your W-2, follow the steps below. These instructions will work if your housing allowance is included in box 1 of your W-2. If it's not in box 1, it may result in an over adjustment of income.

1. Open or continue your return in TurboTax
2. Select Search and enter W-2
3. Select Jump to W-2
4. When you get to Box 14, enter Clergy Housing in the Description box, followed by the amount. (The amount might be reported to you in a letter from the church or in your employment contract if not on your W-2.) If the allowance isn't automatically classified as Other (not classified), select this option from the dropdown menu. Select Continue
5. If you get additional screens, answer those questions
6. When you reach the Let's check for uncommon situations screen, check the box for Religious employment, then select Continue
7. On the following screen, choose Clergy and select Continue
8. Enter your allowance on the Okay, Tell Us About your Clergy Housing screen. For Qualifying Expenses, enter the lesser of:
   • Your qualified housing expenses
   • The fair rental value of your housing expenses
   • Your housing or parsonage allowance
9. Select Continue, and on the Clergy Self-Employment Tax screen, choose the appropriate option and Continue again

When you see the Your W-2 info so far screen, select Edit to view your W-2 information. If the Box 1 amount hasn't been adjusted for your housing allowance, enter a Line 21 adjustment to income. Here's how:

1. Search for other reportable income and select the Jump to link in the search results
2. Answer No to Did you receive any other wages? and select Continue
3. Scroll to the bottom of the Miscellaneous Income screen and choose Start next to Other reportable income
4. Answer Yes, and on the Other Taxable Income screen, type Clergy Housing Allowance in the description and enter it as a negative number (precede it with a minus sign, for example -10,000) 

Click here for additional information on Ministers and Taxes.

Click here for information on Earnings for Clergy.

Click here for how to enter Clergy Housing.

Click here for deduction for parsonage housing allowance.