If you have clergy, minister, or missionary wages reported on a W-2 that are subject to self-employment taxes, but no FICA (Social Security and Medicare) taxes were withheld:
- From within your TaxAct® return (Online or Desktop) click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
- Click Wages and Salaries to expand the category, then click Wage income reported on Form W-2
- Click Add to create a new copy of the form or click Review to review a form already created
- Click Quick Entry or Step-by-Step Guidance. If you select Quick Entry, be sure to scroll down to answer all applicable questions. If you select Step-by-Step Guidance, the program will proceed with the interview questions.
- If there are no Social Security and Medicare tax withheld (reported in boxes 4 and 6 of Form W-2, respectively), then the screen titled Wages - W-2 - Clergy Wages will appear.
If you have a clergy housing allowance:
Generally, the housing allowance is reported in box 14 of the W-2 and is not included in boxes 1, 3 or 5. The fair rental value of a parsonage or the housing allowance can be excluded from income only for income tax purposes.
No exclusion applies for self-employment tax purposes. Therefore, TaxAct requires that the housing allowance be entered on the Self-Employment Tax Adjustment Worksheet for calculation of the SE tax.
To enter the housing allowance:
- Click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
- Click Taxes to expand the category, then click Self-employment tax adjustments
- Click Yes on the screen titled Self-Employment Tax - Housing Allowance
- The program will proceed with the interview questions for you to enter or review the appropriate information
The allowance is then transferred to Schedule SE, Section B, Part I, Line 2 for calculation of the SE tax, but will not be added to the income on Form 1040
Excess housing allowance is generated when the housing allowance the clergy member received from the church or organization is more than the amount actually used to provide a home. The excess housing allowance will transfer to Form 1040, Line 7.