How do you enter a retired clergy housing allowance?

To enter a retired clergy housing allowance, it was likely reported to you on Form 1099-R.

 

This is found in the Wages & Income section under Retirement Plans and Social Security. As you enter your 1099-R, you will be able to capture the details that it was for a housing allowance.

 

For more details, see: How do I enter a parsonage or housing allowance on a 1099-R?

As a retired clergy member must I still pay seca tax on housing allowance? Box 2b is not checked.

No. 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.

1. 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. 
2. You should have received form 1099-R reporting the distribution. 

To access the entry fields for the 1099-R:

1. From within TurboTax, scroll down the Income Summary List
2. In Category Retirement Plans and Social Security  select  IRA, 401(K), Pension Plan Distributions (Form 1099-R).
3. Add a 1099-R to create a new copy of the form or Click  Edit to review a form already created.
4. The program will proceed with the interview questions for you to enter or review the appropriate information. Enter the data from the 1099-R 

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:

1. Open your Federal return and choose Wages & Income
2. Scroll down to Less Common Income and Show more
3. Choose Miscellaneous Income, 1099-A, 1099-C
4. Choose Other reportable income, and Start/Revisit
5. 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 Schedule 1, line 8, which carried to Form 1040, line 8, will remove it from taxation.  Remember you can only enter an amount equal to your housing expense if it is less than your actual amount received.

• IRS Publication 517

Directions provided at "How do I enter a parsonage or housing allowance on a 1099-R?" do not seem correct to me. Let me explain:

1099-R: box 1=$75,000, box 2a=empty, box 2b=empty. Entry using Easy Step places income on Form 1040 lines 5a and b:  5a = $75,000.  5b = $0

The housing allowance distribution as reported on the 1099-R properly reports it on Form 1040 as tax exempt income.  Of the $75,000 distributed, I can support exemption of only $71,550 (i.e. $3,450 becomes additional reported income).

 

To follow the instructions provided at link does the following:

- Leaves Form 1040 lines 5a and b UNCHANGED.

- Lowers other taxable income by $71,550 (which generates a sizable unearned tax refund!) Oh, I wish it were true.

 

Rather, I think I need to ADD the $3,450 of now taxable income and add the text UNUSED Clergy Housing Allowance. This does the following:

- Leaves Form 1040 lines 5a and b UNCHANGED.

- Increases other taxable income by $3,450 (which results in a commensurate increase in federal income tax ~$800 because the $3,450 is no longer tax exempt!)

 

Help me if I'm wrong; but I must say I believe the advise given at the link is wrong.

The advice given was correct if the $75,000 were also entered into box 2a.

 

Your method is exactly right given the circumstances of your form.  You entered it exactly as received and then enter the $3,450 as a positive number and pay the tax due on that.

 

@1r1shsgd 

First, I am using TurboTax Deluxe, is that the poper TurboTax version to use for recording retired clergy housing allowance?

Yes, TurboTax Deluxe will work for you, @baf97 

I did go ahead and upgrade to Home and Business.  My main issue is how do I record housing expenses related to  money received from that 403b.  I had a few major repairs last year,  (roof replaced, new furnace and drainage issues) and used those funds toward them.  I've recorded the 1099-R OK but not sure how to record repairs.

Thank you,

Brad Fitzlaff

It depends. If the retirement is for housing allowance only, then you can use the following steps to remove the income from your return if you can show you spent that much on the cost of your housing.

 

Other Miscellaneous Income:

1. Sign into your TurboTax Online account
2. Go to Tax Home (left panel)  Wages and Income  section
3. Scroll to  Less Common Income > Select  Miscellaneous Income, 1099-A, 1099-C
4. Select Other reportable Income > Enter a description (Retired Clergy Housing Allowance) and the amount as a negative figure (-100)

At this point, the form 1040 will show your full pension as taxable, but the negative adjustment on Schedule 1, line 8, which carried to Form 1040, line 8, will remove it from taxation.  Remember you can only enter an amount equal to your housing expense if it is less than your actual amount received.

• IRS Publication 517