housing more than box 1

by Erin
(Stanley, NC USA)

Tax preparer here..I have a client that shows box 14, housing allowance. Box one, shows taxable amounts that are LESS than the amount in box 14. Should we consider this incorrect and request a corrected w2? This does not seem right.

Comments for housing more than box 1

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Aug 13, 2021
Housing Allowance NOT Reported in Box 1 of a W-2
by: Vickey

No. That is probably correct.

Housing allowance payments are considered "nontaxable" income when it comes to income taxes and must be separated out and reported in Box 14. Please see IRS Topic 417.

Also, many ministers' compensation packages contain larger housing allowances than salaries.

However, when figuring the housing exclusion amount to report on their Schedule SE on their personal income tax return... you can only claim the lesser of 3 specific amounts (see my housing allowance article by clicking on "RESOURCES" at the top nav bar, then MINISTERS TAXES).

So, I always advise my church clients NOT to designate a housing allowance more than their minister's actual housing expenses as it is not tax beneficial for them.

One last note, PLEASE consider advising your client to seek a tax professional that specializes in clergy tax returns ... if you don't specialize in those type of returns as ministers have quite a few "unusual" tax conditions=)

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Join in and write your own page! It's easy to do. How? Simply click here to return to Designating Housing Allowance.

If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)

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