A minister's housing allowance is excludable from gross income for income tax purposes but not for self-employment tax purposes.
If you receive as part of your minister's salary an amount officially designated by the church (in advance of payment) as a housing allowance, and the amount isn’t more than reasonable pay for your services, you can exclude the housing allowance from your income.
Please take the following steps:
- Please enter your W-2 from the church and proceed to the next "special circumstances" screen.
- Check the box for religious wages (see screenshot attached).
- Enter the amount of your housing allowance or fair market value of parsonage, and your qualified housing expenses. In most cases, both numbers will be the same
- On the next screen, check "Pay self-employment tax on housing allowance only (I assume the church withheld Social Security on your salary)
