Are you a minister? If so, did you receive a W-2 or a 1099Misc?
Your housing allowance is always subject to self employment tax. It may not be subject to income tax if you are eligible and report it correctly. Please tell us more about your tax situation and how you entered the housing allowance.
See instructions below for how to exclude your housing costs from federal tax if you either received a W-2 or a 1099Misc. The housing costs will be subject to self-employment tax.
If you received a W-2 follow the below steps:
Go to the W-2 section and enter your W-2.
1. When you get to Box 14, enter CLERGY HOUSING, followed by the amount. We’ll automatically classify the allowance as Other - not on the list above. select Continue. (The amount might be reported to you in a letter from the church or in your employment contract if not on your W2.)
2. If you get additional screens, answer those questions.
3. When you reach the Do any of these uncommon situations apply to this W-2? screen, check the 4th box for Religious employment, then select Continue.
4. On the following screen, choose You earned this income for clergy employment and select Continue.
5. Enter your allowance on the Tell Us About your Clergy Housing screen. For Qualifying Expenses, enter the lesser of:
o Your qualified housing expenses;
o The fair rental value of your housing expenses; or
o Your housing or parsonage allowance. (Housing allowance – qualifying expenses = taxable income)
6. Select Continue, and on the Clergy Self-Employment Tax screen, choose the appropriate option and Continue again.
For CD Download version
If you're not already on the W-2 entry screen, search for "W-2" or "W2" (lower-case also works) and click the "Jump to" link in the search results. Follow the instructions to import or manually enter your W-2.
1. When you get to Box 14, enter CLERGY HOUSING, followed by the amount, and then click Continue. (This amount might be reported to you in a letter from the church or in your employment contract if not on your W2.)
2. We’ll automatically classify the allowance as ‘Other’. Click Continue.
3. If you get additional screens, answer those questions.
4. When you reach the Do any of these uncommon situations apply to this W-2? screen, check the 4th box for Religious employment, then click Continue.
5. On the following screen, select You earned this income for clergy employment and click Continue.
6. Enter your allowance on the Tell Us About your Clergy Housing screen. For Qualifying Expenses, enter the lesser of:
o Your qualified housing expenses;
o The fair rental value of your housing expenses; or
o Your housing or parsonage allowance. (Housing allowance – qualifying expenses = taxable income)
7. Click Continue, and on the Clergy Self-Employment Tax screen, select the appropriate option and click Continue again.
8. If you get additional screens, answer those questions.
1. When in your account, select the Take Me to My Return button on the main screen.
2. Search for business code and then click the "Jump to" link in the search results.
3. Answer Yes when asked if you want to work on or set up your business (you may need to upgrade to Self Employed/Home & Business).
o If you land on the Business Summary screen, click Edit next to your clergy entry or Add Another Business if you haven't yet set it up.
4. Continue with the questions, and when you get to the business code screen, enter 813000.
5. Keep answering the questions, and eventually you'll get to the Clergy and Recognized Religious Sects screen.
o Make sure the first option is selected (that you need to pay self-employment) and then click Continue.
6. On the next screen, you'll be able to enter your parsonage or housing allowance amount.