If clergy is paid in housing allowance do you claim self-employment and do you claim any deductions?

A qualified minister's housing allowance, subject to certain limitations, is excluded from federal income tax.  Also, the fair rental value of a church provided parsonage is excluded from federal income tax.  The housing allowance IS subject to self-employment tax, as is the value of a provided parsonage.

 

The total amount of the housing allowance is included in income in order to determine self-employment tax reported on Schedule SE.

 

How you enter your housing allowance depends upon how it was reported to you.  See the following TurboTax Help article for how to enter your housing allowance.  Note, at the bottom of the article are additional links for other scenarios.

 

How do I enter a parsonage or housing allowance if I got a 1099-NEC?

I’m wondering if I select “pay SE tax on wages and housing allowance” under the W-2 income tab, how do I add deductions for vehicle expenses and mileage? Or should I file all my income (including housing allowance) under Self-Employed Income?

Can you clarify if you were issued a W-2 or 1099 from the church?

A W-2.

If you have a clergy housing allowance: Generally, the housing allowance is reported in box 14 of the W-2 and is not included in boxes 1, 3 or 5. The fair rental value of a parsonage or the housing allowance can be excluded from income only for income tax purposes. No exclusion applies for self-employment tax purposes.

 

This is how you should enter your housing allowance if it is reported to you on a W-2:

 

For TurboTax Online:

To enter your parsonage or housing allowance if it is reported on your W-2, follow the steps below. These instructions will work if your housing allowance is included in box 1 of your W-2. If it's not in box 1, it may result in an over adjustment of income.

1. Open or continue your return in TurboTax
2. Select Search and enter W-2
3. Select Jump to W-2
4. When you get to Box 14, enter Clergy Housing in the Description box, followed by the amount. (The amount might be reported to you in a letter from the church or in your employment contract if not on your W-2.) If the allowance isn't automatically classified as Other (not classified), select this option from the dropdown menu. Select Continue
5. If you get additional screens, answer those questions
6. When you reach the Let's check for uncommon situations screen, check the box for Religious employment, then select Continue
7. On the following screen, choose Clergy and select Continue
8. Enter your allowance on the Okay, 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
   • Your housing or parsonage allowance
9. Select Continue, and on the Clergy Self-Employment Tax screen, choose the appropriate option and Continue again

When you see the Your W-2 info so far screen, select 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:

1. Search for other reportable income and select the Jump to link in the search results
2. Answer No to Did you receive any other wages? and select Continue
3. Scroll to the bottom of the Miscellaneous Income screen and choose 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 it as a negative number (precede it with a minus sign, for example -10,000)

TurboTax CD/Download Instructions

If you're not already on the W-2 entry screen, open your return. (To do this, sign in to TurboTax and open or continue your return.) Then search for W-2 and select the Jump to link in the search results. Follow the instructions to import or manually enter your W-2.

1. When you get to Box 14, enter Clergy Housing in the Description box, followed by the amount. (The amount might be reported to you in a letter from the church or in your employment contract if not on your W-2.) If the allowance isn't automatically classified as Other (not classified), select this option from the dropdown menu. Select Continue
2. If you get additional screens, answer those questions
3. When you reach the Let's check for uncommon situations screen, check the box for Religious employment, then select Continue
4. On the following screen, choose Clergy and select Continue
5. 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
   • Your housing or parsonage allowance
6. Select Continue, and on the Clergy Self-Employment Tax screen, choose the appropriate option and Continue again

When you see the Here's your W-2 info screen, select 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:

1. Search for other reportable income and select the Jump to link in the search results
2. Answer No to Did you receive any other wages? and select Continue
3. Scroll 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 Any Other Taxable Income screen, type Clergy Housing Allowance in the description and enter it as a negative number (precede it with a minus sign, for example -10,000)

 

How to file and get credit for clergy Housing Allowance on 2022 Tax Return?

Would you clarify, did you receive a W-2 form or 1099?