@sbanbahj wrote:
yes u are right in all your assumptions....what do i do if they refuse..you mention that I have a couple of options when preparing your return.
So, you have a situation where you received a 1099-NEC from church 1 for $14,000 that was designated as a housing allowance. You received $16,000 from church 2 with no paperwork?
Since you don't have a W-2 to get started, you may need to upgrade to the Premium version of Turbotax online to create a schedule C for self-employment, even though you aren't actually self employed. Or you can purchase Turbotax Deluxe for a lower cost to install on your own computer from a CD or download, either direct from Turbotax or from Amazon or another reliable retailer. Go into the program and create a new self-employment business for yourself. Use job code 813000, this is for clergy and will prompt Turbotax to ask about your housing allowance, enter the total ($30,000). This will create a schedule SE to pay self-employment tax on the housing allowance. But, you don't enter any business income or expenses for the clergy "business." If you have wages from non-clergy jobs, or your spouse works, continue to enter the other income, deductions and credits you may have.
For the 1099-NEC, there are 3 options. Each has advantages and drawbacks.
1. Leave it off your tax return. The IRS instructions still say that if you get an incorrect 1099-NEC, you should leave it off your return, print your return and file by mail, and attach a copy of the 1099-NEC and a letter of explanation. However, you can't e-file if you do this.
2. Enter the $14K of income on your clergy self-employment job, then enter a miscellaneous expense of $14,000. This will allow you to e-file, but the IRS may send a letter questioning the expense and you will have to reply with your story.
3. Enter the 1099-NEC as "other income" (miscellaneous income). Go to the 1099-NEC page and enter the details. After you enter the information from the 1099-NEC, you will come to a screen that asks "Does one of these uncommon situations apply?" Select "This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby." The income will be reported as other income on Schedule 1 line 8z. Then, go to the Turbotax section for "Other income" and enter additional hobby income of negative $14,000 (minus $14,000) to offset the income, and an explanation like "Clergy housing allowance erroneously reported on a 1099". Again, you can e-file with this method but the IRS may ask for clarification later.
