Clergy - Exempt Wages and Housing Allowance

Exempt Wages

Clergy, minister, or missionary wages reported on Form W-2 are subject to self-employment taxes, but no Social Security and Medicare taxes are withheld. When you report your W-2 in the TaxAct program as a minister or member of the clergy, and no Social Security or Medicare taxes are withheld (boxes 4 and 6), you will see a screen titled Minister or member of the clergy?, and you can continue with the interview process to enter your information.

If you need help reporting your Form W-2 in the TaxAct program, go to our Form W-2 - Entering in Program FAQ.

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, the TaxAct program requires that the housing allowance be entered on the Self-Employment Tax Adjustment Worksheet for calculation of the SE tax. The allowance is then transferred to Schedule SE Self-Employment Tax, Section B, Part I, Line 2 for calculation of the SE tax, but will not be added to the income on Form 1040 U.S. Individual Income Tax Return.

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 8.

To report the housing allowance in the TaxAct program:

  1. From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your screen, then click Federal).
  2. Click theTaxes dropdown, then click Self-employment tax adjustments.
  3. Continue with the interview process until you reach the screen titled Self-Employment Tax - Housing Allowance.
  4. Click Yes, and continue with the interview process to enter your information.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.