Since something is amiss, it may be best to delete the existing W-2 and walk through these steps to enter your housing allowance reported on a W-2:
First, delete your W-2:
(To do this, sign in to TurboTax and click the orange Take me to my return button.)
· Search for W-2 (upper- or lower-case, with or without the dash) and then click the "Jump to" link in the search results.
· This brings you to the Here's your W-2 info screen. Click the “trashcan” icon (delete) next to the unwanted W-2 and then answer Yes on the following screen.
If you're not already on the W-2 entry screen, open your return. (To do this, sign in to TurboTax and click the orange Take me to my return button.) Then search for "W-2" or "W2" (lower-case also works) and click the "Jump to" link in the search results. Follow the instructions to import or manually enter your W-2.
- When you get to Box 14, enter CLERGY HOUSING, followed by the amount, and then select the last item in the drop-down which is Other - not on the list above. Click Continue. (The amount might be reported to you in a letter from the church or in your employment contract if not on your W2.)
- If you get additional screens, answer those questions.
- When you reach the Do any of these uncommon situations apply to this W-2? screen, check the 4th box for Religious employment, then click Continue.
- On the following screen, select You earned this income for clergy employment and click Continue.
- Enter your allowance on the Tell Us About your Clergy Housing screen. For Qualifying Expenses, enter the lesser of:
- Your qualified housing expenses;
- The fair rental value of your housing expenses; or
- Your housing or parsonage allowance. (Housing allowance – qualifying expenses = taxable income)
- Click Continue, and on the Clergy Self-Employment Tax screen, select the appropriate option and click Continue again.
You will now be on the Here's your W-2 info screen. Click Edit to view your W-2 information. If the Box 1 amount hasn't been adjusted for your housing allowance, enter a Line 21 adjustment to income. Here's how:
- Search for "other reportable income" and then click the "Jump to" link in the search results.
- Answer No to Did you receive any other wages? and click Continue.
- Scroll all the way to the bottom of the Let's Work on Any Miscellaneous Income screen and click Start next to Other reportable income.
- Answer Yes, and on the Other Taxable Income screen, type Clergy Housing Allowance in the description and enter it as a negative number (precede it with a minus sign, e.g. -10,000).
Here's some more info, if needed:
Members of the clergy (ministers, members of a religious order, and Christian Science practitioners and readers) and religious workers (church employees) must pay self-employment tax (SE tax).
The following income is included in the SE tax calculation on Schedule SE:
- Salaries and fees for your ministerial services
- Money for marriages, baptisms, funerals, masses, etc.
- The value of meals and lodging provided to you, your spouse, and your dependents
- The fair rental value of a parsonage (including the cost of furnished utilities) or the rental allowance (including an amount for utilities)
- Any amount a church pays toward your income tax or SE tax, other than withholding the amount from your salary.
Clergy housing is only included as income when determining your self-employment taxes, not when calculating your federal income tax.
You aren’t required to pay SE tax when any of the following applies:
- You’re a member of a religious order that has taken a vow of poverty.
- You have requested, and the IRS has approved, an exemption from self-employment tax.
- You are subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country.
As a licensed, commissioned, or ordained minister, you may be able to deduct the fair market value of a home, a parsonage (in-kind housing), or a housing allowance.
A clergy person is not allowed the special housing allowance if the church has not previously designated an amount in writing. The church must have this in writing before you can use it.
You can deduct the lowest of these amounts:
- The amount actually used to provide or rent a home;
- The fair market rental value of the home (including furnishings, utilities, garage, etc.);
- The amount officially designated (in advance of payment) as a rental or housing allowance; or
- An amount which represents reasonable pay for services.
The housing allowance payments must be used in the year received, and any allowance that exceeds actual housing expenses counts as income.
Although the excludable portion of clergy housing isn't subject to federal income tax, you'll still have to pay self-employment taxes on it.
I am trying to follow the steps here, but I don't see a jump to the "other reportable income" in the search. So I can't find the Line 21 adjustment to income and the steps after that. Any help?
Here is another way to get to the Other Reportable Income section:
- On the Wages & Income screen, scroll to the Less Common Income section.
- Click the Start/Revisit box next to Miscellaneous Income, 1099-A, 1099-C
- On the next screen, Let's Work on Any Miscellaneous Income, Other Reportable Income is the last item on the list.
You can follow the rest of MichaelDC's directions to enter a line 21 adjustment to income, which I've copied here for your convenience:
- Click Start next to Other reportable income.
- Answer Yes,
- On the Other Taxable Income screen, type Clergy Housing Allowance in the description and enter it as a negative number (precede it with a minus sign, e.g. -10,000).