Unused clergy housing allowance

[ryansjunkdrawer]

I enter my Housing Allowance (HA) and my Qualified Expenses (QE), but the difference (my HA is more than my QE) never appears anywhere as taxable income. Why is that? It should show up somewhere, right?

I thought about just adding it as "misc income" but then I can't designate it as exempt from self-employment tax (I have form 4361).

Every other minister out there should be facing this same issue if their QE is less than their HA, right?

[Opus 17]

When entering a W-2, you check the box for religious wages and enter your housing allowance and qualifying expenses.  You have to enter the HA again even if it is in box 14 of your W-2.  If you are entering the HA after entering 1099-MISC with business code 813000, there may not be a place to subtract your expenses, this is a flaw of the online program that they did not seem interested to fix.

Tell me more about your situation and I can probably come up with some workarounds.

[ryansjunkdrawer]

Right, so TurboTax has a dialogue for religious workers where we report both our HA and out QE. The QE is non-taxable. However, the unused portion should be taxable. The problem is that TurboTax seems to not actually do anything with the unused portion. It "seems" like it is going to because it knows that your HA and QE are two different numbers. So, it knows that difference should be accounted for. However, it doesn't do anything with the difference. It doesn't appear anywhere.

So, my issues is that I need to make sure that my "unused" housing allowance (HA-QE) is accounted for. On top of that, I need to make sure that this "income" is not taxed for self-employment because I am exempt.

[ryansjunkdrawer]

UPDATE - So, I decided to delete my W2 and start from scratch. This time, it appears TurboTax did what it should. It took the difference from my HA and QE and applied it as misc income. I'm just assuming that it isn't applying SE tax to it... not sure how to see that.

[Opus 17]

OK good.

Your housing allowance is always subject to SE tax.  Wages and the non-qualified part of the housing allowance are also subject to income tax.  

If you go to My Account / Tools / Tax Summary / Preview my 1040 you should see that your form 1040 line 7 income includes both your box 1 wages and your non-qualified housing allowance with a comment in the margin.  Your SE tax is on line 57 and should be roughly 15% of your entire housing allowance plus wages.

Unfortunately, turbotax online restrict access to the forms until after you pay and you can't directly view the forms and worksheets to check situations like this.  That's one of the reasons I prefer turbotax installed on my own computer.

Also be aware there is another bug affecting calculation of clergy SE taxes on housing allowance.  It doesn't affect everyone but seems to be limited to turbotax online and is another reason to think about buying the desktop program this year.  You can read more about it here. https://ttlc.intuit.com/questions/3531386-is-there-a-bug-in-the-way-schedule-se-is-being-handled-for...

If you;ve never read this its a very good guide. http://www.ecfa.org/PDF/2016-Preparing-Tax-Returns-For-Clergy.pdf