Although clergy are considered self-employed for income tax purposes, most clergy are common law employees of their church and should get a W-2. Typically it should have boxes 3-6 empty. In Turbotax, check the box for "religious employment" on the page of special circumstances, and answer the questions about self-employment tax and a housing allowance or fair market value of the parsonage if one is provided. Turbotax will calculate the correct self employment tax automatically.
You will only need a schedule C if he also has side income such as cash from weddings and funerals. (Use job code 183000.) The main W-2 goes in the W-2 section.
This is an important resource http://www.ecfa.org/PDF/2016-Preparing-Tax-Returns-For-Clergy.pdf
If your husband received a W-2, then you are entering your expenses in the wrong place.
- For a quick return to what you must report, type "Clergy" in the Search box, then click Jump to clergy.
- The program will take you to the W-2 income screen. Click on the Edit icon.
- Continue clicking through the screens until you come to the one headed Do any of these uncommon situations apply to this W-2? Select the box for Religious employment. (Click on the screenshot below for an image.)
- On the next screen, About Your Religious Employment, select You earned this income for clergy employment.
- Continue working through these screens until you have answered all the questions.
You will only need to file a Schedule C if your husband receives payment for performing weddings, funerals, etc. apart from what he earns as a pastor. If he has this income, then you can report it and the associated expenses as self-employment income.