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Clergy housing allowance

MMM7
Level 1

A retired minister has (2) 1099R forms issued from the church and said the person issuing the 1099R said one of the forms represents his housing allowance and is eligible for the fededaral exclusion. I have doubts that it should have been on a 1099R. Suggestions??

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4 Replies 4
Rick19744
Level 3
Level 3

I believe this would be okay, with the following comments:

  1. That the 1099-R reflects that the taxable amount is not determinable
  2. In order to qualify, the housing allowance amount must be designated in advance.  I would recommend obtaining something in writing from the Church which shows that the housing allowance was in fact determined in advance.  
  3. The housing allowance for retired ministers is no different than that or active ministers in that it is not taxable as long as it does not exceed the lesser of actual housing expenses or the annual fair rental value of the home (furnished, plus utilities).
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BGross
Level 1

Isn't clergy housing allowance subject to Social Security?  How do you handle this in Lacerte to have the income not taxable for ordinary income but make it subject to Self Employment income?  When I enter the cost of the housing allowance in Schedule C it eliminates it for SE so this makes it not subject to ordinary income or SE income? 

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Dave W
Level 3

Not sure if it's treated the same in Lacerte as it is in ProSeries, but in ProSeries on the W-2 Worksheet you can enter clergy housing allowance in the Part 2 of the Additional Information section, which is below the normal W-2 input fields. ProSeries has a section titled "Clergy, church employees and members of recognized religious sects" and the housing allowance is entered there. 

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BobKamman
Level 15

From IRS Pub 517

Amounts not included in gross income.
Don't include the following amounts in gross income when figuring your net earnings from
self-employment.
• Offerings that others made to the church.
• Contributions by your church to a tax-sheltered annuity plan set up for you, including
any salary reduction contributions (elective
deferrals) that aren't included in your gross
income.
• Pension payments or retirement allowances you receive for your past ministerial
services.
• The rental value of a parsonage or a parsonage allowance provided to you after
you retire.

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