Reporting 100% Housing Allowence

by Marc K
(Minnesota)

I asked this somewhere else- but now I realize that may have been the wrong spot.

I receive 100% of compensation as HA as it does not cover my reasonable housing expenses, in fact not even my rent.

Our CPA has advised that I not receive a w-2 since I did not receive actual "line 1 income" as he put it. What I can't seem to figure out is how do I report that HA compensation, since it will show up on my Schedule SE? Or do I even need to report that outside of the Schedule SE?

Comments for Reporting 100% Housing Allowence

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Apr 02, 2015

Question
by: Lauren

I have been trying to find an answer everywhere. If anyone could help it would be much appreciated.

I am self-employed (small business owner) and my husband works full time as a Pastor.

We started the church a few years ago. In 2014, he received a $26000 housing allowance as a salary, or should I say a salary of $26000 as an independent contractor and 100% is designated for a housing allowance.

My question is, does our church fie a 1099 and in box 7 reporting that he received $26000?

And then when we are doing our taxes, Is his income reported as 0 on a schedule C, but the allowance is reported there? And then I attach a form SE because I know we are subject to SE taxes on the $26000.

Or do we report the 1099 as income (because the church issued him one) but then how does the IRS know that that income is not subject to federal taxes, only SE?

BASICALLY WHAT GOES ON WHAT FORM AND WHERE? (for this particular scenario). If anyone who knows can help, it would mean the world to us.

We have been turned down by several local tax professionals because in addition to this issue, we also adopted a special needs teen this year and I have a schedule C for my business. I have that all figured out myself though, this is the only issue left at this point. I am blessed to have a friend who is willing to sit down with me to double check everything before I submit, but I want to have a full understanding of this situation myself. Thanks again!

Feb 09, 2015

Thanks
by: Marc K

Thanks for the advice. I do have a letter, I just needed to know if I am supposed to report the HA anywhere else besides my SE- from the sounds of things it seems not.

Feb 08, 2015

Housing Allowance compensation
by: D Fry

Your church should give you a letter stating the amount of pay you received as well as the Housing Allowance given to you. If it exceeds your income, then a W-2 would probably not be necessary, as no income would be recorded as paid. But the statement would satisfy your requirements for reporting the Housing Allowance as income for SECA purposes. Your CPA should be able to give you more detailed guidance.

Feb 08, 2015

Reporting 100% Housing "Allowance"
by: Lewis in NC

The properly approved housing allowance would go on schedule SE, and you must have other income to report also; otherwise, how did you eat and pay all your expenses that were not housing? personal travel fuel expense? dentist? doctors? medicines? entertainment? spousal and childcare? etc., etc.

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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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