Clergy Housing Allowance

[tghampson]

How do I show clergy housing allowance as an exclusion from gross income for federal tax purposes, but show the amount for self-employment tax purposes?

[RichardG]

A minister's housing allowance is excludable from gross income for income tax purposes but not for self-employment tax purposes.

If you receive as part of your minister's salary an amount officially designated by the church (in advance of payment) as a housing allowance, and the amount isn’t more than reasonable pay for your services, you can exclude the housing allowance from your income.  

 Please take the following steps:

•  Please enter your W-2 from the church and proceed to the next  "special circumstances" screen. 
  
•  Check the box for religious wages (see screenshot attached). 
  
•  Enter the amount of your housing allowance or fair market value of parsonage, and your qualified housing expenses.   In most cases, both numbers will be the same 
• On the next screen, check "Pay self-employment tax on housing allowance only (I assume the church withheld Social Security on your salary)

[Opus 17]

Typically clergy are common law employees and will receive a W-2, even though they are self-employed for some tax purposes.  Box 1 should be the wages and box 2-6 are typically blank.  Your housing allowance must be set by the church in writing in advance, and should not be included in box 1.  Instead, you report it separately as noted in the other answer.  If your housing allowance is included in your box 1 wages, you need to get a corrected W-2 from the church, there is no way to exclude housing on your tax return unless it is excluded by the church on your W-2.  If your housing allowance is not set in advance and in writing by the church and excluded from your W-2, you can't deduct clergy housing in any other way.