How do I enter minister's housing allowance

[Movie1]

I have a letter from my church recording my Housing allowance which is 100% of my compensation ($2200) How do I enter it since - as it is not my business income? Mileage: I often must drive to the church for police activity, trash removal, plumbing etc.  that is not my ministerial duties-is that deductible as a business mileage expense?  I also use my device to do live streaming each Sunday-does that change the mileage deduction status? Please forgive all of the questions. I am trying to give you content for my questions thank you.

[AmyC]

1. To enter your housing allowance you have to answer all of the questions with the w2. Follow these steps:

1. Return to the W-2, edit
2. Continue
3. Marking the w2 as religious employment
4. continue
5. select Clergy on the next screen
6. continue
7. Enter parsonage or housing allowances and expenses
8. continue
9. Screen Now tell us about your clergy self-employment taxes, select the correct answer
10. continue

Once you have fully finished entering the w2 information above, the correct forms will be created for you to finish your return.

2. Mileage related to church trash, plumbing, etc are all due to the management position at the church. You may be able to get reimbursed by the church or be able to delegate those duties to someone else. Those are job related expenses and not deductible at the federal level.

3. Driving to work is not a deduction. Live streaming is not related to driving.

Be sure to select the clergy option when entering the W2 and TurboTax will do all the calculations.

• Click here for clergy income and expense information.
• Click here for clergy information from the IRS.

You fall under the clergy rules. 

• The salary from the W2 is reported on the form 1040.
• Money received from weddings, offerings, special events outside their church would be reported on Schedule C for self employment.
• Housing allowance is not reported as income for personal income tax but is included for self employment tax.
• Expenses related to the salary are deducted as miscellaneous job related expenses on itemized deductions - not between 2018-2025 for the federal, they may be allowed on your state.
• Expenses relating to other income reported on Schedule C would be entered on that schedule.

[RobW1959]

I received $5509.57 as a minster's housing allowance on a 1099-MISC.  How do I enter this using TurboTax Deluxe 2021?

[JillS56]

First, read this article Clergy Housing Allowance

When you receive a Form 1099-MISC Box 7 and not a W-2, Enter the 1099-MISC as business income. For the principal business code, use 813000 (religious organization). After you enter that business code you will get a screen about clergy income. Select "I Need to Pay Self-Employment Tax on This Income." The next screen will ask you to enter the amount of your housing allowance. Continue through the business interview and enter your 1099-MISC.
 

You can go directly to the area to begin to enter your income and expense for your pastoral self-employment.

1. Select the Federal taxes tab (Business tab in Self Employed Online or TurboTax Home & Biz Desktop)
2. Select Wages & Income
3. Scroll to Business Income
4. Start or Update
5. Use the information above to complete your return. (see image attached).

Your housing allowance is not reported on any tax document.  If your housing allowance is reported in box 7, the church needs to issue a corrected 1099-MISC.  The 1099-MISC should only report your taxable wages, not including the housing allowance.

[hellohello456]

Hello Amy

I am reading your response to this person and I see this statement

1. Enter parsonage or housing allowances and expenses

In Turbo tax there are two questions one is Enter parsonage or housing allowance.  the other is to enter actual expenses.

I entered my housing allowance on the first (parsonage or housing allowance) and left the 2nd empty.  When I was finishing up and Turbo reviewed it took me back to that form and asked me to put an amount in the second question asking for actual expenses. So I just put the same info, my housing allowance in there.  Then what I owed in tax went way down.  So did I just take two housing allowances by doing that and if so which question do I fill out with my actual housing allowance?  I believe I only need to put my housing allowance down right?   Actually, my board allowed more than my expenses. So I decided to take $400 less in housing allowance.  If that helps you with answering. Where do I put the amount on both lines or just one? Thank you!

[DMarkM1]

You do enter amounts in both boxes typically.  The first box you enter the housing allowance you actually received. This will be added to your income on form 1040, line 1h as other income "excess housing allowance."  That is, at that point, taxable income.  In the second box you enter your actual expenses for housing.  This will remove the income from taxable income lines (1h). 

Next, the housing allowance and your clergy wages are subject to self-employment taxes and are added to the Schedule SE.  You will be asked questions to determine the self-employment taxes due.  For example, if you have an approved form 4361 or if social security and medicare have already been withheld.  The answer to those questions may remove amounts from the Schedule SE as applicable.    

[hellohello456]

Mark I would like to click as the best answer but there is only one that says Mark it as new.  But this really helps thankyou!!

[Movie1]

Hello, thank you for your time. Last year I had only to put 813000 for the business then follow the prompts- Then add only Housing Allowance, then select adjustments- then use my mileage and other deductions to reduce my tax liability. This year, though I do have a small love offering- The process is different, I even worked forward and looked for other tax situations and still could not find Housing Allowance. Should I just go to forms and look? Also, there will be no taxable overage - my church is very small and my housing allowance was $4070.  Just my mortgage alone would cover that. 

[BrittanyS · Accepted solution]

813000 is the correct code for entering the housing and allowance.  To enter the housing and allowance you will still go through the Schedule C if you did not receive a W-2.  Follow these steps to enter the housing and allowance:

1. Select Business
2. Click Add a business
3. Enter the 813000 code
4. Select I need to pay self-employment tax on this income.  
5. Enter your housing allowance or parsonage (see screenshot below)
6. Continue interview questions to report ministry income and expenses

Generally, a love offering will not be tax-deductible to the giver. When the giver knows that a gift will go to a specific person, the tax law treats the gift as if it were being made to the specific person. It will be nondeductible, even when handled through a church.  You don't need to report the gift as income on your tax return.

See link below for more information on love offerings:

Are love offerings taxable?

@Movie1 

[Movie1]

Thank you very much! I discovered that my issue was that the cash accounting method was not selected. Once I did that edit, then the box generated for the additional data. The information for the love offering was icing on the cake! I did not know the difference was in the gift being given to the church or to the individual! Wow! what an eye opener! Thank you!

[MoniqueLO_]

Thank you for the update! If you need help with anything else, please let us know.

@Movie1 

[yoannayoyo]

@DMarkM1  I’m so glad I found this answer. I also wanted to know, how does one determine the self-employment taxes due? There is no form 4361 and no social security and medical taxes were withheld.   Would the “pay self employment taxes on wages” select or housing allowance or both? 

thank you 

[PattiF]

You would select both, you do need to pay self-employment tax on the housing allowance. The housing allowance is not included in gross income.

Please see this IRS FAQ about the subject and IRS Publication 517 for additional information for Members of the Clergy.

@yoannayoyo 

[Suzy81]

Hello!

  A housing allowance is the only compensation received right now and is not reported on any form.  When entering the info, the screen with the housing allowance only shows one box, not two.  What do we need to correct so we can enter the actual housing allowance, then actual expenses? Thanks!

[Cynthiad66]

To enter the housing and allowance you will go through the Schedule C if you did not receive a W-2.  Follow these steps to enter the housing and allowance:

1. Select Business
2. Click Add a business
3. Enter the 813000 code (business code for housing allowance)
4. Select I need to pay self-employment tax on this income.  
5. Enter your housing allowance or parsonage 
6. Continue interview questions to report ministry income and expenses

Housing allowance is excludable from gross income for federal and state income tax purposes but not for self-employment tax purposes. When a portion of compensation is received as housing allowance, federal and state taxes are directly reduced.

If your housing expenses does not exceed the housing allowance, you do not have to report it.  However, if you have excess housing allowance that is taxable as Self Employment income on Schedule C as stated above.

@Suzy81