How to claim Housing Expenses for Retired Minister with RMD income from a 403b being offset by it?

[rogerpickering]

RMD income from 403(b) is Housing Allowance and is to be offset by Housing Expenses effectively reducing income.

[AmyC]

First, ensure the designation:

• For your RMD to qualify as a tax-free housing allowance, your 403(b) provider (the denominational pension board) must formally designate a portion of the distribution as housing allowance before the distribution is made.
• Most denominational providers (like GuideStone or AG Financial) automatically designate 100% of distributions as housing allowance for retired clergy

Next, determine the allowed amount. It is the lowest of these 3 amounts:

• The amount officially designated by your 403(b) provider.
• Your actual housing expenses for the year (mortgage, utilities, repairs, etc.).
• The Fair Rental Value (FRV) of your home (fully furnished, including utilities)

When you enter the 1099-R, the allowed housing allowance reduces the taxable amount. Hopefully to zero but if there is say $2,000 left (lowest of the 3 options) to be taxed, that $2,000 would show up on 1040 line 5b, taxable income.

To actually enter the form, see How do I enter a parsonage or housing allowance on a 1099-R?

[rogerpickering]

Thank you for your answer and it is correct for denominational pastors where pension boards produce the 1099r form.  But it doesn't work that way for pastors of independent churches.  The local church board

designates the housing allowance but the investment vehicle (403b) and the 1099r is produced by the investment company and they show "taxable income" on 1099r.  They don't know any different.  

The article you referred me to in essence is saying I have to enter info and produce the forms myself and I am

unable to have Turbo tax populate the info I send them.  But actually all  Turbo Tax needs to do is ask a few more questions and with "independent Church status" and a couple other questions they could complete the form, knowing the 1099r form has to be changed from "taxable income" to a zero or some lesser amount depending on actual housing expenses.  Enjoyed using TurboTax except for this issue.  Thanks.