Where do i enter unused housing allowance

[cdrway]

I entered my housing allowance (used) under business code 813000 and my unused housing allowance under other business income.  However, my employer included my housing allowance in box 7 of my 1099-misc.  Right now the program is charging me income tax on the total housing allowance plus the unused housing amount and social security tax on the used plus unused housing amounts.  
One answer from a couple years ago suggested entering the housing allowance included in box 7 of 1099-misc as a business expense to remove it from the income tax calculation.  If I do this the tax calculations are correct but the Gross Income on Schedule C is 1099 amount plus unused housing amount which means the "unused" is included twice.  How can I make this work?

[DianeW]

The unused won't be added twice if you include the full 1099 amount as an expense.

[cdrway]

I tried and it is included in GROSS INCOME twice.  Is this ok?  Is it used for anything else? Once the 1099 amount is removed as an expense the taxable income is correct.

[DianeW · Accepted solution]

If you have an amount of your housing allowance that is greater than the expenses you can include the payment as income on the self employment schedule.  Then list in the housing allowance screen, only the amount that is actually used for housing. (see image attached).  Be sure to use the 813000 business code.  Information at this link may also be helpful:  Is a parsonage or housing allowance deductible?

1. Select the Federal taxes tab (Business tab in Self Employed Online or TurboTax Home & Biz Desktop)
2. Select Wages & Income (Business Income and Expenses in Self Employed Online or TurboTax Home & Biz Desktop)
3. Update/Edit or Add another business 
4. Scroll to Business Income - Include the income here for the unused clergy housing allowance.
5. Start or Update (see image)
6. Use the information above to complete your return. This should not require an upgrade if there are no expenses associated with the income.

[KStorment]

I cannot find "Business Income" anywhere and, unfortunately, despite this post mentioning "attached photos" several times, there are no photos attached for reference. 

My income was reported on a 1099-NEC and the total amount for my housing allowance was not included in that reported income. I did not use all of my housing allowance, and am desperately trying to find where to add that excess income in TurboTax. The IRS website clearly states it should be listed as "Excess Allowance" on line 1, but because I cannot just access my return myself, I am jumping all over the place trying to figure out which category TurboTax wants me to add this income to. It feels like with as many people using housing allowances in this country, there would be an automatic question about whether or not you have an excess allowance to report. 

Every time I have tried to add it in somewhere, it has caused me to owe state taxes, which I should not have to pay on this income. This makes me believe I am not recording this income in the right place. Someone please help me! @DianeW 

[JohnB5677]

You can post this to other reportable income.  It will be added to Schedule 1 and included in your income.

1. Go to Wages & Income
2. Scroll all the way down to Less Common Income
3. Select Miscellaneous Income, 1099-A, 1099-C from the drop-down
4. Select Other reportable income
5. Any Other Taxable Income? = Yes
6. Description = Excess housing allowance
7. Amount = $

[KStorment]

Thank you @JohnB5677 !

I appreciate your clear instructions. I was able to find what you are talking about and enter my excess housing allowance. Unfortunately, when I enter the excess allowance, it is causing me to owe state taxes. My income should not be subject to state taxes, and no state taxes were added when I entered the information from my 1099-NEC. It seems to me that, as the income is all from the same source and all for the same type of work, that I should not have to pay state taxes on that excess just because I have to fill it in on a different part of the form.

Anyone have any thoughts on that?

Thank you so much for your help!

[DianeW777]

First, you should carefully review your state return to see if there is a section that would allow you to remove this income. If not, then provide the name of the state return you are trying to complete for more assistance.

You can send us a “diagnostic” file that has your “numbers” but not your personal information.  If you would like to do this, here are the instructions: 

Go to the black panel on the left side of your program 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. This will allow us to open a copy of your return without seeing any personal information.  

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. 

[KStorment]

Thank you so much @DianeW777 !

I looked through my Virginia return and did not see any option to make changes, so I created a diagnostic file like you suggested. My token number is 960227. 

Again, when I originally entered my 1099-NEC income, it showed me owing 0 Virginia state taxes. Virginia state taxes were only added when I entered my unused housing allowance overage as Other Reportable Income as was suggested by @JohnB5677 . I am really hoping you can see something I cannot see in my return and can help me get that excess housing allowance marked in the right place!

Thank you!

[DianeW777]

A letter ruling by the Commissioner, although dealing with allowable expenses, makes it clear that Virginia (VA) follows federal law. 

According to VA Ruling 12-141 (specifically the paragraph discussing IRC § 107 posted below) it appears they follow federal law when it comes to housing allowance for ministers or clergy.

Pursuant to IRC § 107, an individual who qualifies as a minister of the gospel can exclude a housing allowance, subject to certain limitations, from gross income. According to documentation provided by the Taxpayers, an amount spent for housing was excluded from the husband's income for federal income tax purposes. Because the housing allowance was not included in the Taxpayers' FAGI, it would not also be deductible as an ordinary and necessary expense paid or incurred on behalf of a trade or business during the taxable year.

This simply put, this means that housing allowance is excluded for VA income up to the amount it was used for the cost of housing which is exactly how it is treated for federal purposes.  For this reason the unused housing allowance should be included as part of your VA income.

Please update if you need further assistance.