As a clergy person, my housing expenses are tax exempt; this continues with my church pension in retirement. My pension is designated 100% as housing allowance. How do I enter the taxable excess of my housing allowance over actual housing expenses?
(2019) NOTE: Clergy Pension Benefit Exclusion from tax If Church provides evidence of connection and %age.
For RETIRED CLERGY WITH PENSION DISTRIBUTIONS (Form 1099-R)
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.
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You may include this Form 1099-R Information Return's data with an electronically filed return using the instructions below. NOTE: The "Supplemental Information" mentioned in this procedure is not transmitted but that is not a problem. Read further!
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:
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", SEE IMAGE #1
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 allowance as 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.
[Form 1040 Line 21 Adjustment if needed for 1099-R Box 2b ]
If Box 2b is NOT checked, then you should report as taxable for the 1099-R the amount reported and adjust it as follows. SEE IMAGES #2, #3, & #4
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.
In Reply to a Question - The eFile may not transmit supplemental worksheets which is not important.
For your own records you always want to save a PDF with everything printed, so check Tax Return All Calculations All worksheets. Nowadays, as well documented in yesterday's WSJ -2/23/16 - the IRS conducts almost all inquiries by postal mail and in the form of an inquiry - so having available the worksheet to simply print and mail back would satisfy any inquiry were it to happen - but it is unlikely in any case
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s/ Scruffy Cumudgeon ® ™
Retired Firefighter/Medic
Retired
When I right click, nothing opens up to input the supporting details?
If box 2b is checked instructions did not work for me. What may work is entering the total distribution on the first line of supporting details, and on the second, the housing deduction as a negative. That gave me a 0 amount in the taxable box.
MAC Desktop program does not provide for right-clicking - functionally deficient.
@drpmoeller Please state what "did not work for me" means - what was the result of following the instructions? Did you enter a negative amount?
Very helpful! Wish I had this info when entering my 2018 return.
Mr. Cumudgun, Thank you for your helpful post about clergy housing allowance if 2B is not checked on 1099R. Do these instructions still apply if box 2A shows none of the gross distribution is taxable? Copy C of my 1099R has the total gross distribution designated as housing allowance on the bottom left corner of the form (not written in any of the boxes 1-19). Your help would be greatly appreciated. Sincerely, Paula [PII removed]
If the 1099-R shows in Box 2 that none of the distribution is taxable, you do not need to make any adjustments.
Try double clicking on the box -- that brought up the additional information box for me (Mac Airbook).
Hello Scruffy - I entered my 1099-R in the Income section of TurboTax. All of it is housing allowance. Do I need to do a Schedule C business entry and list this same amount as housing allowance? Does TurboTax then now let my 1099-R I entered in the Income section be taxed?
Thanks for the help,
Tim - retired ELCA clergy
If you are retired clergy and have no clergy income @Tiny-Tim401 then you do not have to complete a Schedule C.
If the entire amount of your 1099-R is a housing allowance then it is tax free for retired clergy.
If there is no taxable amount in Box 2a of your Form 1099-R, enter $0 since 100% of your distribution is a tax-exempt housing allowance.
If there is an amount in Box 2a, enter a subtraction in the Less Common income section.
For more info: FAQ: THE MINISTER’S HOUSING ALLOWANCE