@CyndieT wrote:
This same subject applies to us because we are a church and employees have to pay their own self-employment taxes I'm trying to figure out how to report on w2 and file in turbo tax. It won't let me change the gross wages for the self employment form and if I include all gross pay in box1 it won't let me enter a 403b deduction. Any ideas?
You generally can't contribute to a 403(b) except by payroll deduction. In other words, you agree to a salary reduction, and your employer contributes that money to the plan in lieu of paying you a salary. You can't make out of pocket contributions to a 403(b) as far as I am aware, even as a minister.
In addition, wages that are contributed to a 403(b) plan are still considered earned income and are still subject to social security and medicare tax, or SE tax. The reason you only have to pay income tax on withdrawals when you retire, is that you paid the SE on all your earnings when you earned it, even though part was contributed to a retirement plan. So for a W-2 employee, a pre-tax 403(b) contribution reduces their box 1 taxable income but not their box 3 social security income.
I may not understand your whole situation, but if you have 403(b) deferrals, your church should subtract them from your box 1 wages, but you need to report income for SE tax purposes equal to your full salary plus housing allowance. You can do this by increasing the reported housing allowance. For example, let's say your gross salary is $20,000, plus a $15,000 housing allowance. Your employer reduces your salary by $3000 and contributes that to a 403(b). Your W-2 box 1 wages should be $17,000, your boxes 2-6 should be blank, and you would report $18,000 of housing allowance ($15,000 + $3000, because you need to get the SE total up to $35,000 one way or another.)
There's another way to adjust it manually in forms mode using Turbotax installed on your own computer from a CD or download, that you can't do if using Turbotax online, but you shouldn't need the online program for this.
After reading that, do you still have a question?
