My 1099-R, Box 2a is blank. This income is exempt under the Minister's Housing Allowance. Can I attach a note somewhere in my TurboTax to make this clear to the IRS?

[MichaelDC]

No. The attachment shouldn't be necessary. As a retired minister, you can exclude any documented housing expenses from your allowance. Any allowance in excess of your documented expenses is considered taxable income.

If you're not already on the 1099-R screen, open your return, search for 1099-R or 1099R (lower case works too) and then select the "Jump to" link in the search results. Follow the directions to import or manually enter your 1099-R.

How you account for the exclusion depends on whether or not Box 2b (taxable amount not determined) is checked.

If Box 2b is checked

1. Subtract your documented housing expenses from the gross distribution amount in Box 1.
2. Enter the result in Box 2a, Taxable Amount, if it's a positive number.
   • If the result is a negative number or 0, enter 0 in Box 2a.

If Box 2b is not checked

Enter your 1099-R exactly as you see it. You'll make an adjustment on another screen:

1. With your return open, search for other reportable income and then select the "Jump to" link in the search results.
2. Answer No to Did you receive other wages? and select Continue.
3. Scroll all the way to the bottom of the Let's Work on Any Miscellaneous Income screen and select Start next to Other Reportable Income.
4. Answer Yes, and on the Other Taxable Income screen, type Clergy Housing Allowance in the description and enter your documented housing expenses as a negative number (precede the expenses with a minus sign, e.g. -10,000).

This will remove the nontaxable portion from the distribution reported on your 1099-R.

[barrlois]

This is not working for me.  Box 2a is checked.  I entered the taxable amount as $0.  But the full amount on the 1099R still shows up as taxable income.  On the worksheet, where one is to enter the smaller amount, the program has entered the larger amount, and it won't let me change it.  Can this error be corrected?

[DianeC958]

The full amount that shows up on your 1099R still reports on the form 1040 on line 4c.  Showing on that line does not make it taxable.

If any part of it is taxable is shows on line 4d.

If Box 2b is not checked

Enter your 1099-R exactly as you see it. You'll make an adjustment on another screen:

1. With your return open, search for other reportable income and then select the "Jump to" link in the search results.
2. Answer No to Did you receive other wages? and select Continue.
3. Scroll all the way to the bottom of the Let's Work on Any Miscellaneous Income screen and select Start next to Other Reportable Income.
4. Answer Yes, and on the Other Taxable Income screen, type Clergy Housing Allowance in the description and enter your documented housing expenses as a negative number (precede the expenses with a minus sign, e.g. -10,000).

This will remove the nontaxable portion from the distribution reported on your 1099-R.

@barrlois

[G-DAD]

When following the directions to place the taxable amount (which is 0) in line 2a of the 1099R, Turbotax returns an error for the line that states: 

Form 1099-R (XXXXXXXXXXXX): Taxable amount should not be zero if there is no prior year excess traditional

IRA contribution on line 4 of the IRA Information Worksheet.

And requires a Statement

Form/Line: Form 1040/1040-SR Worksheet     4a (1040/1040-SR)

Explanation of: Return of Prior Year Excess Traditional IA Contributions

[DaveF1006]

It depends. Here are some guidelines to use that is suggested by Turbo Tax in the following article. 

"If box 2b is checked

Enter the appropriate taxable amount in box 2a of the Enter your 1099-R details screen.

1. Enter the amount in box 1 as it's shown on your 1099-R.
2. Subtract your documented housing expenses from the gross. distribution amount in box 1 and enter the result or zero (whichever is greater) in Box 2a - Taxable amount.
3. Check Taxable amount not determined box is checked in the box 2b section.
4. Enter the rest of your 1099-R as you see it.

If box 2b is not checked

1. Enter your 1099-R exactly as you see it and complete the 1099-R section.
2. Search for other reportable income and then select the Jump to link in the search results.
3. Answer No to Did you receive any other wages? and select Continue.
4. Scroll all the way to the bottom of the Let's Work on Any Miscellaneous Income screen and select Start next to Other Reportable Income.
5. Answer Yes to Any Other Taxable Income?
6. On the Other Taxable Income screen, type Clergy Housing Allowance in the description and enter your documented housing expenses as a negative number up to the amount reported in Box 2a Taxable Amount (precede the expenses with a minus sign, like -10,000).

This will remove the nontaxable portion from the distribution reported on your 1099-R."  

Let us know if this helps.

@G-DAD