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.
3Comments
W-2c and W-3c
VVickey
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.
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.
How to Fix Wages and Allowance After the Fact
Ssufferthechild
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?
subtracted from the salary--Housing Allow.?
AAnonymous 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.