Incorrect Schedule SE tax figure for clergy

[drew1982]

I am an ordained pastor and I have to file as self-employed. On my scheduled SE form, the number TurboTax inputs in line 2 and 3 is significantly more than the total of my income on w2 plus housing allowance. It is like TurboTax is adding my wife's income to form even though she is not self-employed. I have deleted and re-entered the w2s multiple times. Does anyone know what could be happening? Thank you!

[DawnC]

It may be a typo or something might be doubling up.  Take a look at the SE Adj Wks to see a breakdown of the amount on line 2 of Schedule SE.   Did you check the religious employment box in the uncommon situations screen after you entered your W-2?  

You may need to make an adjustment if your housing allowance was included in Box 1.   See the 2nd help article below for instructions on making the adjusting entry.    

Is my clergy income subject to self-employment taxes?

How do I enter a parsonage or housing allowance reported on a W-2?   Choose your platform to see how to make the adjustment if necessary.

[drew1982]

Thank you so much for the quick reply. 

Yes, I checked the religious employment box and then checked that I was clergy. Just income was in box 1 and housing allowance was in box 14 of my w2. 

What is SE Adj Wks? That sounds helpful. I was on the phone with turbo tax for an hour and half today and neither of us could figure out what combination of numbers were getting added up to make the number in line 2 of my Schedule SE. It is very close to all income for the year for our whole family (wife's w2, interest income, etc) but not exact.  Thank you again. 

[DianeW777]

If you would like to send us a “diagnostic” file that has your “numbers” but not your personal information it would help.  If you would like to do this, here are the instructions:  (Don't forget to give us the state)

TurboTax Online:

Open your return -Go to the menu panel on the left side of your return and select Tax Tools. 

1. Then select Tools below Tax Tools. 
2. A window will pop up which says Tools Center.  
3. On this screen, select Share my file with Agent. 
4. You will see a message explaining what the diagnostic copy is.  Click okay through this screen and then you will get a Token number. 
5. Reply to this thread with your Token number and your state. This will allow us to open a copy of your return without seeing any personal information.  

TurboTax Desktop:

If you like, you can send a copy of your return that will be scrubbed to eliminate your personal data by using these steps:

1. Click on Online in the top left menu of TurboTax CD/Download for Windows
2. Select 'Send Tax File to Agent'
3. Write down or send an image of your token number and state then place in this issue.
4. We can then review your exact scenario for a solution.
5. Please also tell us any states included in the return. This is necessary for us to view the return.

We will then be able to see exactly what you are seeing and we can determine what exactly is going on in your return and provide you with a resolution. 

@drew1982 

[drew1982]

Thank you so much. I followed your instructions. 

Token Number: 1286150 

State: Virginia 

[DianeW777 · Accepted solution]

Take the following steps to remove housing allowance in your business schedule.  You already have it in the W-2 which is where it belongs. By entering it again in the business section it is being added twice for your self employment tax.

• Business > Business Income and Expenses > Update beside Profit or Loss from Business > Update beside General Business Information > Edit beside the Business Code > Continue > Continue > Remove Your Housing Allowance or Parsonage Allowance.

This will send the correct amount to your Schedule SE for your self employment tax calculation without doubling the housing.

@drew1982 

[drew1982]

That's it. I cannot thank you enough! but i'll try...thank you!

[LordHelpMe]

IF CLERGY HOUSING ALLOWANCE IS IN W-2 BOX 14 -

1. IF YOUR ACCOUNTANT PUTS YOUR HOUSING ALLOWANCE IN box 14 on your W2, put it in box 14 on TurboTax, PICK Other - not classified, continue.
2. LET'S CHECK FOR UNCOMMON SITUATIONS: Check Religious Employment, continue
3. LET'S DIG INTO YOUR RELIGIOUS EMPLOYMENT: Check Clergy, continue
4. OK, TELL US ABOUT OUR CLERGY HOUSING: Parsonage or housing allowance = 0 (put nothing or zero). Do fill in your qualifying expenses, continue.
5. NOW TELL US ABOUT YOUR CLEARGY SELF-EMPLOYMENT TAXES: Pay self-employment tax on my housing allowance.
6. You'll know you did this right if your housing allowances shows up right on your SE.

IF CLERGY HOUSING ALLOWANCE IS **NOT** IN W-2 BOX 14 -

1. IF YOUR ACCOUNTANT OMITS YOUR HOUSING ALLOWANCE FROM box 14 on your W2 but GIVES YOU A LETTER INSTEAD, leave that box blank, Continue
2. LET'S CHECK FOR UNCOMMON SITUATIONS: Check Religious Employment, continue
3. LET'S DIG INTO YOUR RELIGIOUS EMPLOYMENT: Check Clergy, continue
4. OK, TELL US ABOUT OUR CLERGY HOUSING: Parsonage or housing allowance = put in your housing allowance here. Do fill in your qualifying expenses, continue.
5. NOW TELL US ABOUT YOUR CLEARGY SELF-EMPLOYMENT TAXES: Pay self-employment tax on my housing allowance.
6. You'll know you did this right if your housing allowances shows up right on your SE.

DO NOT DO THIS:
1. Search for other reportable income and select the Jump to link.
2. Answer No to Did you receive any other wages? and select Continue.
3. Scroll to the bottom of the Let's Work on Any Miscellaneous Income screen and select Start next to Other reportable income.
4. Answer Yes, and on the Any Other Taxable Income screen, type Clergy Housing Allowance in the description and enter it as a negative number (precede it with a minus sign) -- YOUR RETURN WILL LOOK VERY WRONG WITH NEGATIVE NUMBERS ON Schedule 1 box Z, and the SE box 2. It will also mess up your STATE.