Once you reduce the pension amount by the housing allowance,
only the difference will be taxable. If your 1099-R reports only the
pension and excludes the housing allowance, generally all you need to do is enter your
1099-R and you're finished. I recently discussed this issue with another minister - he entered a dollar in 2a to resolve the issue.
You can also enter the full amount of Box 2 in Box 2a, then make an adjustment in Other Income, following the
instructions below, to claim your full housing allowance:
- Open your Federal return and
choose Wages & Income
- Scroll down to Less
Common Income and Show more
- Choose Miscellaneous Income,
1099-A, 1099-C
- Choose Other reportable
income, and Start/Revisit
- Select ‘yes’ and you will be
prompted to enter Description and amount. Enter the description
"Retired Minister Housing Allowance," and enter the amount
as a negative number. At
this point, the form 1040 will show your full pension as taxable, but the
negative adjustment on Line 21 for your housing allowance will remove it
from taxation.
