I am a pastor, my employer sent me a W2, but does not withhold for Social Security (SE) tax. How do I allocated my tax refund in turbotax to cover the necessary SE taxes?

Forum|Forum|7 years ago
June 4, 2019
7 replies
69 views

I believe I am considered a "contractor" which is why I received a W2, but also need to pay my own social security at the 15.3% rate I just adjusted the W2 to mark religious employment. When I added in my housing allowance, I initially left the "qualifying expenses" blank, which made my tax owed skyrocket. It appears that if I used the fullness of my housing allowance these two cells would show the same number? That seemed to level out my taxes to where I would expect.

TurboTax Deluxe Windows

Best answer by KatherineC

As clergy, Social Security and Medicare are not withheld from your wages. So you have to report your income a little differently.

I'm going to include the directions for reporting Form W-2 plus housing:

You will report your Form W-2 under Wages & Income in the Wages and Salaries section.
Once you have reported your W-2 information, exactly as it appears on your Form W-2, click continue.
You may be asked to verify some numbers.
Keep going until you get to the page titled “Do any of these uncommon situations apply to this W-2”?
Click the box beside Religious Employment. See Screenshot below
You will be asked about your religious employment.
Next, you will have a box to enter your housing allowance, if any, as well as your qualifying expenses (click on the blue Learn More for further information).
Enter your housing allowance amount and how much of the allowance you actually used on your housing.
On the following page, you will be asked what amount(s) should have self-employment taxes calculated for. See the second Screenshot below
If you had Social Security and Medicare withheld from your wages, you would need to indicate to pay self-employment taxes on the housing allowance only. If you did not have Social Security and Medicare withheld from your wages, indicate that you need to pay self-employment tax on wages and housing allowance.
Click continue and you are done!

For further information, click here.

KatherineCAnswer

Level 8

As clergy, Social Security and Medicare are not withheld from your wages. So you have to report your income a little differently.

I'm going to include the directions for reporting Form W-2 plus housing:

You will report your Form W-2 under Wages & Income in the Wages and Salaries section.
Once you have reported your W-2 information, exactly as it appears on your Form W-2, click continue.
You may be asked to verify some numbers.
Keep going until you get to the page titled “Do any of these uncommon situations apply to this W-2”?
Click the box beside Religious Employment. See Screenshot below
You will be asked about your religious employment.
Next, you will have a box to enter your housing allowance, if any, as well as your qualifying expenses (click on the blue Learn More for further information).
Enter your housing allowance amount and how much of the allowance you actually used on your housing.
On the following page, you will be asked what amount(s) should have self-employment taxes calculated for. See the second Screenshot below
If you had Social Security and Medicare withheld from your wages, you would need to indicate to pay self-employment taxes on the housing allowance only. If you did not have Social Security and Medicare withheld from your wages, indicate that you need to pay self-employment tax on wages and housing allowance.
Click continue and you are done!

For further information, click here.

Opus 17

Level 15

Clergy are considered self-employed for certain tax purposes and are responsible for paying their own SE and income tax, but if you answer to a board, the congregation or denomination then you are a common law employee for most other legal purposes and should receive a W-2.

This has a lot of helpful information. <a rel="nofollow" target="_blank" href="http://www.ecfa.org/PDF/2016-Preparing-Tax-Returns-For-Clergy.pdf">http://www.ecfa.org/PDF/2016-Preparing-Tax-Returns-For-Clergy.pdf</a>