Why not include housing allowance in W-2?

by Deborah Tomasi
(Culver City, CA)

Is there some logical reason not to include housing allowance on the W-2 form?

I know that the cleric is not required to pay income tax on the clergy housing income, but am I to understand that he/she must pay self-employment tax on the housing portion?

Comments for Why not include housing allowance in W-2?

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Dec 24, 2020
Box 14 on a W-2 for Housing Allowance
by: Vickey

You can definitely report housing allowance payments in the "informational" Box 14 on a W-2 form.

BUT ... be aware that it is an "informational" box only! The recipient of the W-2 then takes that information and includes the lesser of 3 amounts (see my housing allowance page) on a SCHEDULE SE in their personal tax return.

If the taxpayer has NOT filed and been approved to opt out of social security ... reporting the eligible amount of housing allowance on a SCH SE will ensure that the self-employment tax they pay is credited to their SS account.

What I see way too often is churches including those housing allowance payments in Box 1 on a W-2. Those payments are not subject to income tax and should not be reported in that box as the entire amount in Box 1 is taxable income. They should also NEVER be reported on a 941 form.

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