Retirement tax questions

(2019) NOTE:  Clergy Pension Benefit Exclusion from tax If Church provides evidence of connection and %age.

For RETIRED CLERGY WITH PENSION DISTRIBUTIONS (Form 1099-R)

How to enter a RETIRED clergy housing allowance - Form 1099-R

The IRS allows a housing allowance to retired ministers to the extent the recipient can justify the amount. Should you receive more than you can justify, the excess should be considered taxable.
________________________________________________________________________________ ______

You may include this Form 1099-R Information Return's data with an electronically filed return using the instructions below.  NOTE: The "Supplemental Information" mentioned in this procedure is not transmitted but that is not a problem.  Read further!

You may file a paper return with an attachment stating that you received an exempted housing allowance as a retired clergy member. Be sure to include the amount received. You should keep documentation in your records to justify the amount of the housing allowance. This subject is covered in IRC Section 107, which you can mention in your statement. 

You should have received form 1099-R reporting the distribution. To access the entry fields for the 1099-R:

• From within TurboTax, scroll down the Income Summary List
• In Category Retirement Plans and Social Security  select  IRA, 401(K), Pension Plan Distributions (Form 1099-R).
  
• Add a 1099-R to create a new copy of the form or Click Edit to review a form already created.
  

The program will proceed with the interview questions for you to enter or review the appropriate information. Enter the data from the 1099-R excepting Box 2 information - see next.

If Box 2b  is checked [Taxable Amount Not Determined] then  right click the field for Box 2a and select "Add supporting details",  SEE IMAGE #1

a.    make sure  the "NOT print box is not checked!

b.   In first line of description enter "Taxable amount reported in Box 2a  and in the Amount enter the Box 2 amount.

c.   In the second line enter description "Deduction for Housing  Allowance"  and in the Amount enter as a negative the allowance as an adjustment

d.   If the Housing Allowance exceeds the Pension received and a negative sum results, then reduce the Housing Allowance so that  the sum is zero.

[Form 1040 Line 21 Adjustment if needed for 1099-R Box 2b ]
If Box 2b  is NOT checked, then you should report as taxable for the 1099-R the amount reported and adjust it as follows.  SEE IMAGES #2, #3, & #4

a.  After exiting the 1099-R entry, return to the Income Summary list.

b.  Scroll down the list to "Less Common Income" and select    "Miscellaneous Income""

c.  Select "Other Reportable Income"  - to the question   "Any Other Taxable Income"  answer "yes"

d.  Enter for Description = "Clergy Housing Allowance" and for amount - as a negative the housing allowance amount.
     This adjusting entry will appear as a negative amount on Page 1 of 
     Form 1040 line 21 with description showing.

In Reply to a Question - The eFile may not transmit supplemental worksheets which is not important. 
For your own records you always want to save a PDF with everything printed, so check Tax Return All Calculations All worksheets.  Nowadays, as well documented in yesterday's WSJ -2/23/16 - the IRS conducts almost all inquiries by postal mail and in the form of an inquiry - so having available the worksheet to simply print and mail back would satisfy any inquiry were it to happen - but it is unlikely in any case

********************************
s/ Scruffy Cumudgeon ® ™
Retired Firefighter/Medic

Retired