No, you only need to pay income tax on the excess housing allowance. TurboTax should only add the portion (if any) of your housing allowance that was greater than the lesser of FMV or actual expenses.
If you're not already on
the W-2 entry screen, open your return. (To do this, sign in to TurboTax and
select the Take me to my return button.) Then search for
"W-2" or "W2" (lower-case also works) and select the
"Jump to" link in the search results. Follow the instructions to
import or manually enter your W-2.
1.
When you get to Box 14, enter CLERGY HOUSING, followed by
the amount. We’ll automatically classify the allowance as Other -
not on the list above. select Continue. (The amount might be
reported to you in a letter from the church or in your employment contract if
not on your W2.)
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 4th 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:
o Your qualified housing
expenses;
o The fair rental value of
your housing expenses; or
o Your housing or
parsonage allowance. (Housing allowance – qualifying expenses = taxable income)
2.
Select Continue, and on the Clergy
Self-Employment Tax screen, choose the appropriate option and Continue
again.
You will now be on the
Here's your W-2 info screen. select Edit to view your W-2
information. If the Box 1 amount hasn't been adjusted for your
housing allowance, enter a Line 21 adjustment to income. Here's how:
1.
Search for "other reportable income" and then select
the "Jump to" link in the search results.
2.
Answer No to Did you receive any other wages?
and Continue.
3.
Scroll all the way to the bottom of the Let's Work on Any
Miscellaneous Income screen and choose Start next to Other
reportable income.
4.
Answer Yes, and on the Other Taxable Income
screen, type Clergy Housing Allowance in the description and enter it as
a negative number (precede it with a minus sign, e.g. -10,000).
