Housing Allowance for pastor

[smith4asu]

I am a pastor using Turbo Tax and trying to figure out my social security tax. If I am required to pay social security tax on both income and housing allowance, why does Turbo Tax give me a choice of paying on both or on just either income OR housing?

[DaveF1006]

It should give you a choice to pay both.  As you scroll through the questions, Turbo Tax will first ask what your housing allowance and expenses are.  You will enter the information on this screen and select continue.

The screen following is Now tell us about your clergy self-employment taxes. Here you will indicate you will pay self-employment on your wages and housing allowance. When you select this, turbo Tax will determine your SE tax for both.  You do not need to do anything additional.

[smith4asu]

Yes I see that. But why does turbo tax give a choice? What are some circumstances where someone would choose just Income OR housing to pay social security tax? Not counting the the form to opt out? When I choose either one the tax required is obviously much less. But these added together are also much less that choosing housing and income together. Just trying to lay as little as possible 

[DaveF1006]

Under the current tax code, you are required to pay SE income on your wages and the fair market value of the parsonage as explained here. You may use the housing expenses to reduce the amount of SE tax on the parsonage as explained in this Turbo Tax link. 

As far a making a choice on which one to pay, I can't think to any exceptions.  In the first link I referenced above it  states You aren’t required to pay SE tax when any of the following applies:

• You’re a member of a religious order that has taken a vow of poverty
• You've requested, and the IRS has approved, an exemption from self-employment tax
• You're subject only to the social security laws of a foreign country under the provisions of a social security agreement between the United States and that country.

In your case, you may have requested an exemption for exclusion for wages or housing allowance, or both. This might be an instance where you can make a choice on which income to include SE taxation.

@smith4asu