Frequently Asked Questions
Minister's Housing/Parsonage Allowance
Where does the minister’s housing allowance go on the W-2 form?
Church treasurers and payroll services often ask this question. Taxable income is reported in Box 1 of the W-2 form. Since housing allowance is excluded from income tax it is not included in the Box 1 amount. There is no place on the W-2 form for reporting housing allowance. It may be reported in one of the following ways:
The church employer should provide the minister with a letter on church letterhead stationery stating the amount that was designated by the church board as housing allowance for the tax year.
Indicate the housing allowance amount in Box 14 followed by clergy housing allowance.
Where is the housing allowance reported on the Income Tax return?
The 1040 form reports taxable income. The housing allowance is not subject to income tax and therefore, is not reported on the 1040 form. However, if the minister did not use all of the designated housing aHowance for housing, he/she must declare the unused portion on line 21, other income. The minister or tax preparer should write unused parsonage aHowance on line 21 foHowed by the amount not used.
Housing allowance is subject to Social Security. Ministers must complete and submit Schedule SE along with the 1040 form. Total the salary (as reported in Box 1 of the W-2 form) plus honoraria (as reported on Schedule C) plus the housing allowance and record this total on line 2 of the SE form.