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lehreid1
New Member

How can I account for a partial year housing allowance? The only choices in Turbo Tax relate to a full year.

 
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4 Replies

How can I account for a partial year housing allowance? The only choices in Turbo Tax relate to a full year.

Were you a W-2 employee for part of the year with the same church? Tell us more about your tax situation.
lehreid1
New Member

How can I account for a partial year housing allowance? The only choices in Turbo Tax relate to a full year.

Thanks for your response.   I worked for a para-church ministry all year, but the first half in a non-ministerial capacity.  In June my status changed to a ministerial role, and I began drawing a housing allowance.  Once I began drawing a housing allowance, the ministry turned over responsibility to me to pay all federal taxes (on both housing and W-2 wages).   The W-2 form they gave me at year end showed my social security wages for the year were $23,000, compared with total compensation of $76,000.   I do pay social security on housing allowance and w-2  wages.  But I can't find a choice in Turbo Tax for how to handle a partial year.  I need to pay self-employment tax on both W-2 Income and Housing allowance but only for half of the year.

How can I account for a partial year housing allowance? The only choices in Turbo Tax relate to a full year.

TurboTax is not designed to handle the situation when you are a non-clergy employee for part of the year and a clergy employee for part of the year working for the same organization.  You will have to make certain manual adjustments, or see a tax professional this year.

 Another user may be able to answer, although I seem to generally be the clergy expert. I'm traveling right now, so it may be a while before I can put all the details down in writing. I will get back to this eventually.

How can I account for a partial year housing allowance? The only choices in Turbo Tax relate to a full year.

So this is an important resource although it does not deal with your specific problem.  https://www.efca.org/sites/default/files/resources/docs/2018/01/mintax_preparing_2018.pdf

As I said, Turbotax won't handle this situation without help.

One solution I saw suggested by a Turbotax employee is to split your W-2 into two different imaginary W-2s, one for the non-clergy period that lists your wages and tax withholdings, and the other one listing box 1 wages only and blanks in boxes 2-6.  Then, you would enter W-2 #1 normally as if it was a normal job.  Then enter W-2 #2 and check the box for religious employment, enter the housing allowance and check the box for "pay SE tax on wages and housing allowance.

However, entering 2 W-2s for the same employer may create an error in the program.  And entering 2 W-2s that don't match the one that was filed, may trigger an IRS letter.  I just don't know if this method really works, but it would compute the correct tax.

The method I would use requires installing Turbotax on your own computer so you can directly access the forms and worksheets.  Note that overriding the forms prevents e-filing and voids the accuracy guarantee, so if this concerns you, you may want to see a tax professional who understands clergy issues.

Using the manual adjustment method, enter the W-2 as-is, check the box for religious wages, and enter your housing allowance and qualifying expenses.  Then, click the Forms icon to change to forms mode and find the Schedule SE Adjustment Worksheet (Sch SE Adj Wks).  Locate line 5a, clergy wages.  Highlight the amount and click Override from the Forms command menu.  You need to change the line 5a amount from your entire wages for the year, to only the amount that was from your clergy wages that was not taxed, by subtracting the amount that was taxed.

The end result is that only your untaxed clergy wages and housing will be used to calculate the SE tax.  But as said, this requires a manual adjustment that voids the guarantee.

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