First,
you need to have designated a portion of your retirement for housing allowance,
just as you did when you were an active minister. 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, all
you need to do is enter your 1099-R and you're finished.
However, if the pension does include the housing allowance, the entry for your housing
allowance depends on if box 2b (taxable amount not determined) on your 1099-R
is checked or not. The taxable difference of the pension and excluded
housing allowance will have to be manually entered in the 1099-R interview
questions.
-
If your Form 1099-R has Box
2b checked, then to claim a housing allowance for
retired clergy, enter a taxable amount in Box 2a of the 1099-R data entry
screen in TurboTax. To compute the taxable amount, subtract the allowable housing expenses from
the pension amount. If the housing expenses exceed the pension,
enter a zero in
Box 2a.
-
If Box 2b is not checked, please enter the 1099-R exactly as it appears on
the form. This will cause the full amount to show as taxable. You will
make your adjustment in Other Income, following the instructions below:
- Open your
Federal return and choose Wages & Income
- Scroll
down to Less Common Income (you may have to select See more income to
view this topic) and Show more
- Choose
Miscellaneous Income, 1099-A, 1099-C
- Choose
Other reportable income, and Start or 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.
