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Level 2
posted Apr 15, 2021 9:40:45 AM

Need help with clergy section of taxes

Hi guys, I had a few questions regarding the clergy section of taxes. 

 

Under "Parsonage or housing allowance received" my housing allowance was entered in.

 

  1. Can I add my total yearly utilities into the "Qualifying expenses" section? My utilities was paid out of pocket.

I get paid Salary, and I don't pay medicare or social security 

  1. Do I pay self-employment tax on my wages and housing allowance or just my housing allowance?

 

0 4 443
4 Replies
Expert Alumni
Apr 15, 2021 1:04:09 PM

Yes, you can include the cost of your utilities as part of your housing expenses to eliminate paying personal income taxes on excess housing allowance.  

  • IRS Topic 417  -  A minister who receives a housing allowance may exclude the allowance from gross income to the extent it's used to pay expenses in providing a home. Generally, those expenses include rent, mortgage interestutilities, and other expenses directly relating to providing a home.

 

You must select to pay self-employment tax on your wages and housing allowance unless you have previously filed for exemption.

 

Level 2
Apr 15, 2021 1:53:37 PM

"Generally, those expenses include rent, mortgage interestutilitiesand other expenses directly relating to providing a home."

 

So I use my housing allowance to cover all of my rent and I pay out of pocket for my utilities. 

 

Does that mean that I can also include my rent along with my utilities in the "Qualifying Expense" section?

 

So IE: 

"Parsonage or housing allowance received"

$20,000 (Box 14)

 

"Qualifying Expense"

$20,000 (Total Yearly Rent) + $Utilities. 

Level 2
Apr 16, 2021 6:29:14 PM

Does anyone one have any more thoughts on this?

Expert Alumni
Apr 21, 2021 1:09:06 PM

Yes, according to this link from IRS.gov,  "a minister who receives a housing allowance may exclude the allowance from gross income to the extent it's used to pay expenses in providing a home. Generally, those expenses include rent, mortgage interest, utilities, and other expenses directly relating to providing a home. The amount excluded can't be more than reasonable compensation for the minister's services."