Reporting a Housing Allowance Only


(Illinois )

We are a very small church, 20 in attendance on a Sunday, we only give our pastor a small housing allowance. Does a W2 need to be done for this? If so how do I go about this.

Comments for Reporting a Housing Allowance Only

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Jan 19, 2020
Church Letter to Report Housing Allowance
by: Vickey

Church "experts" disagree on this subject =( Some say you should file a W-2 with a zero in Box 1 and report the housing allowance payments in Box 14.

But others say (as small as your church is this is what I would do personally)...

that you can simply report the small housing allowance on a letter form the church ...on church letterhead...that states the amount and year.

I give an example of such a letter on this page:

https://www.freechurchaccounting.com/how-do-i-write-a-housing-allowance-letter-for-tax-purpose.html

Jan 27, 2020
W-3 need to be reported?
by: Jason

If House Allowance only, it sounds like we don't need to do a W-2. But if we choose to use a W-2 instead of the letter, do we need to send a copy to the IRS and do we need to send a W-3 (and State-3) at all?

Jan 29, 2020
no 'empty' W2 with online filing?
by: Mariya

Hi, we are also a small church that pays housing allowance only. I was asked by our clergy to report it on W2 (because it lands better with their tax accountant), so fine. But then in the last couple years I was submitting W2s online instead of paper forms and found that I cannot submit and 'empty' (=no earnings) W2, so we have been paying them some fees for extra services, like $20/year just to submit the W2. Is there some other workaround that would not require me to order paper W2s in advance?

Feb 05, 2020
W-2 for Reporting Housing Allowance
by: Vickey

I personally do not report a housing allowance "only" on a W-2. Most online software will not let you put zeros in Box 1. Plus income tax software such as Turbo will not let you enter a W-2 with zero in Box 1.

So, consult a CPA regarding your particular situation.

The CPA I use to work for at Wisdom over Wealth, Bill O'connell, recommended in this post:

https://www.freechurchaccounting.com/how-to-report-housing-allowance-only-on-a-w3.html

to report with a letter to Pastor.

Any tax accountant that knows how to file a minister's personal taxes will know how to take that amount off of that letter and figure what should be reported on the minister's SCH SE.

Tip...it is not always what the church paid in housing allowance payments.

Feb 05, 2020
If you File a Paper W-2 then File a W-3
by: Vickey

If you paper file a W-2 then you are going to have to send a W-3 in with it.

BUT there is NO place on the W-3 to report the housing allowance, so if you are filing a W-2 with a housing allowance only....it will be all zeros.

Again...check with a CPA or tax professional that KNOWS how to work with minister's pay.

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