Is it true that the housing allowance needs to be subtracted from the pastor's salary on the W2?

I have this argument with the pastor every year. I have told him the housing allowance is not reflected on the W2 anywhere other than box 14. That is not subtracted from his gross wages for the W2.

Comments for Is it true that the housing allowance needs to be subtracted from the pastor's salary on the W2?

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Jan 29, 2013
subtracted from the salary--Housing Allow.?
by: Anonymous in NC

The Housing allowance that is properly set up through the Council of the church within the pastor's salary is excluded from his/her income that is reported on his/her W-2 form. For informational purposes to the pastor and the IRS, the Housing Allowance can be included on line 14 of the W-2.

Feb 06, 2013
How to Fix Wages and Allowance After the Fact
by: sufferthechild

Our bookkeeper does not separate wages from housing allowance on my W-2 (nor does he issue itemized breakdowns monthly with my checks). Is there a way I can report this on my 1040 to make up for this without going back and asking him - for the umpteenth time - to do it differently?

Feb 07, 2013
W-2c and W-3c
by: Vickey

If your bookkeeper or anyone else that prepares your W-2 includes your housing allowance in Box 1 or in any other Box beside Box 14...they will need to file a W-2c and W-3c (if already filed) to correct your W-2s.

If your Pastor or bookkeeper argues with you...the only thing you can do is to give them a copy of the IRS Pub 517 and Topic 417.

You could pull up this page on the IRS website too:
http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/Interest,-Dividends,-Other-Types-of-Income/Ministers%27-Compensation-&-Housing-Allowance/Ministers%27-Compensation-&-Housing-Allowance

Point out this first line:
"A minister's housing allowance, sometimes called a parsonage allowance or a rental allowance is excludable from gross income for income tax purposes, but not for self-employment tax purposes."

Including a minister's housing allowance in box 1 just defeats the purpose of the church designating a housing allowance.

If this doesn't work...it may be time to call a board meeting.

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