How do I enter a parsonage or housing allowance on a 1099-R?
As a retired minister, you can exclude any documented housing expenses from your allowance. Any allowance in excess of your documented expenses is considered taxable income.
If you're not already on the 1099-R screen, open your return, search for 1099-R or 1099R (lower case works too) and then click the "Jump to" link in the search results. Follow the directions to import or manually enter your 1099-R.
How you account for the exclusion depends on whether or not Box 2b (taxable amount not determined) is checked.
If Box 2b is checked
- Subtract your documented housing expenses from the gross distribution amount in Box 1.
- Enter the result in Box 2a, Taxable Amount, if it's a positive number.
- If the result is a negative number or 0, enter 0 in Box 2a.
If Box 2b is not checked
Enter your 1099-R exactly as you see it. You'll make an adjustment on another screen:
- With your return open, search for other reportable income and then click the "Jump to" link in the search results.
- Answer No to Did you receive other wages? and click Continue.
- Scroll all the way to the bottom of the Let's Work on Any Miscellaneous Income screen and click Start next to Other Reportable Income.
- Answer Yes, and on the Other Taxable Income screen, type Clergy Housing Allowance in the description and enter your documented housing expenses as a negative number (precede the expenses with a minus sign, e.g. -10,000).
This will remove the nontaxable portion from the distribution reported on your 1099-R.