Partial Year Housing Allowance

[nicolemagelssen]

My husband started 2019 as a normal W2 employee at a church and was ordained and became a clergy in August. He then started a housing allowance and paying self employment tax. I received a W2 from the church. How do I account for the change halfway through the year in turbo tax? I don't see an option.

[MaryK4]

After you enter the W2 information, look for the screen below.  It will ask you the questions to enter your housing allowance and self-employment tax.  Did the W2 have the boxes 3-4-5-6 completed for the partial year?

[nicolemagelssen]

My main question is, I've read online that it matters that 1/2 of the year was normal W2 income and the other 1/2 of the year was clergy. A previous post said to enter two different W2s but that seemed really messy to me.

Boxes 3-6 were completed for the entire year I believe.

[KathrynG3]

Yes, you are correct~that would be messy, and is not recommended. You can be clergy and receive Form W-2 and/or Form 1099-MISC.

For your husband's income, I recommend you begin by entering the Form W-2 exactly as he received it.  

• To enter this in TurboTax: How do I enter a parsonage or housing allowance reported on a W-2?

For the self-employed portion of his earnings he received, you can trust TurboTax to help you capture the details, including some or all of the following:

• Housing allowance:

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

  • Is a parsonage or housing allowance deductible?

• Income from the church: Is my clergy income subject to the self-employment tax?
• Earnings from individuals for baptisms, weddings, and funerals: Reporting self-employed income and associated expenses.

[nicolemagelssen]

I did this but it will not let me file. 

It says: Housing W2 box should not be checked if social security or Medicare tax has been withheld on this W2. 

[JotikaT2]

Your best option at this point is to request that the church issue corrected W-2 Forms. 

You should ask the church to separate the income during his employment as an employee onto 1 W-2 Form.

The other W-2 should show his housing allowance and his income earned after he was ordained.  

You will then be able to enter both W-2s into TurboTax.

For the W-2 where he is an employee, you would NOT check the box when it asks if he was a member of the clergy.  

On the W-2 form which is for his time as an ordained minister, you would select that he was a member of the clergy.   You will then be prompted to enter your housing allowance and fair market value of your expenses.