May 01, 2012

Housing Allowance Reported on Form W-2?

Question:

If I am exempt from social security tax (Form 4361 approved) does what the church paid me in housing allowance need to reported on the Form W-2 the church issues me?

Answer:

Whatever the church pays you in housing allowance is not required to be reported on Form W-2. However, it is advisable, since the minister must compare the housing allowance amount to his actual expenses and to the fair rental value of his home (plus actual cost of utilities) in order to determine whether the housing allowance amount is fully excludible from income. Also, because housing allowance is not exempt from self-employment tax (it only reduces income tax), ministers who are not exempt by virtue of an approved Form 4361 application must report their housing allowance on Schedule SE on their personal tax returns.

The members of my Federal Taxation I class at Maranatha Baptist Bible College in Watertown, Wisconsin have taken on the challenge of study and research to answer posted questions. Julia Doerstling of Lantana, Texas contributed to this posting.

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