Anticipated negative income on W2 for religious employment questions

[Tax4Krause]

I am a minister who teaches for a high school. My pay automatically reflects a 75% housing allowance where I typically have excess that gets reported as income. I am also close to retirement and increased my contributions to our 403b to 30% of my salary. On top of all of this, I have been making estimated payments for SE taxes, as has been typical my entire career.

Since these two percentages add up to more than 100%, I'm running into a situation where my W2 will probably show negative income. I've already had my accounting department report that I had voluntary withholding (to cover SE taxes) returned by the Feds because of this negative income appearance, and hence the return to quarterly payments for estimated taxes.

I'm already working on my taxes from my final pay stub, but Turbotax rejects the possibility of entering a negative amount. Do I just enter 0 for box 1?

Should I anticipate that I will not be able to file electronically?

[Vanessa A]

Yes, if your income on your W2 is negative, you would just enter $0 in box 1.  

A $0 return is when there is no income and no refund or taxes due, which causes the problem with e-file rejections.  

Your housing allowance would still need to be reported on your return as self-employment income, which means, your total income would be more than $0 which will allow you to file your return electronically. Also, since you have been making estimated tax payments, you will likely still have a refund or tax due when you file, again, allowing your return to be eligible for electronic filing.  

Ministers and Taxes