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Level 1

Do I have to pay self employment tax on housing allowance in retirement?

I am a retired pastor and need to know whether I pay self employment tax on housing allowance.
2 Replies
Level 20

Do I have to pay self employment tax on housing allowance in retirement?

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 statement with an electronically filed return using the instructions below.

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",

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 allowanceas 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.

If Box 2b  is NOT checked, then you should report as taxable for the 1099-R the amount reported and adjust it as follows.

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.



Originally answered by user Scruffy_curmudgeon to this question  https://ttlc.intuit.com/questions/2201525
Level 1

Do I have to pay self employment tax on housing allowance in retirement?

If you are a retired minister and receive as part of your pension (for services as a minister) an amount officially designated as a rental allowance, you can exclude the amount designated as a housing allowance from your gross income.

The payments must be used in the year received.