Clergy Housing Exclusion

[Deacon]

I am an ordained clergy member of the United Methodist Church.

I am employed part-time and received a W2 with my income indicated in box 1.

I do not have a housing allowance as part of my income.

However, I do have a designated housing exclusion for tax purposes.  The income indicated in box 1 does not reflect this housing exclusion.  I entered my qualifying expenses in the W2 input process; however, there was no adjustment to my Federal Refund amount.  In the prior year's this is what I did and there was an adjustment.  How do I enter the housing exclusion properly?  Thank you in advance.

[KarenM90]

To enter your housing allowance, please see this TurboTax link   How do I enter a Housing Allowance? 

Here are the basic steps:

1. When you get to Box 14 of the W2 entry, enter Clergy Housing in the Description box, followed by the amount. (The amount might be reported to you in a letter from the church or in your employment contract if not on your W2.) We’ll automatically classify the allowance as Other - not on the list above. Select Continue.
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 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:
   • Your qualified housing expenses
   • The fair rental value of your housing expenses
   • Your housing or parsonage allowance
6. Select Continue, and on the Clergy Self-Employment Tax screen, choose the appropriate option and Continue again.

[TRUSCOTT2189]

Where and how do I enter housing expense deduction for a retired clergy person?

[DianeC958]

As a retired minister, you can exclude the rental value of a home (plus utilities) furnished to you by your church as a part of your pay for past services, or the part of your pension that was designated as a rental allowance, from your gross income. Any allowance in excess of this amount is considered taxable income.

If you're not already on the 1099-R screen, open your return, search for 1099-R and select the Jump to link in the search results. Follow the directions to import or manually enter your 1099-R.

How you account for the exclusion depends on whether or not Box 2b (taxable amount not determined) is checked.

If Box 2b is checked

Enter the appropriate taxable amount in Box 2a of the Enter your 1099-R screen.

1. Enter the amount in Box 1 as it's shown on your 1099-R.
2. Subtract your documented housing expenses from the gross distribution amount in Box 1 and enter the result or zero (whichever is greater) in Box 2a, Taxable Amount.
3. Check Taxable amount not determined in the Box 2b section.
4. Enter the rest of your 1099-R as you see it.

If Box 2b is not checked

1. Enter your 1099-R exactly as you see it and complete the 1099-R section.
2. Search for other reportable income and then select the Jump to link in the search results.
3. Answer No to Did you receive other wages? and select Continue.
4. Scroll all the way to the bottom of the Let's Work on Any Miscellaneous Income screen and select Start next to Other Reportable Income.
5. Answer Yes to Any Other Taxable Income?
6. On the Other Taxable Income screen, type Clergy Housing Allowance in the description and enter your documented housing expenses as a negative number up to the amount reported in Box 2a Taxable Amount (precede the expenses with a minus sign, like -10,000).

This will remove the nontaxable portion from the distribution reported on your 1099-R.

[Opus 17]

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@TRUSCOTT2189 wrote:

Where and how do I enter housing expense deduction for a retired clergy person?

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Be aware, you can only exclude housing costs as a member of the clergy if you pension is paid by your church or denomination (a pension, church-sponsored 403(b), etc.)

If you were to convert or roll over your pension or 403(b) into a private IRA or other investment, you automatically lose the ability to take a tax-free housing allowance from your retirement income.