February 26, 2013

Self-Employment Tax on Housing Allowance

Question:

Is a minister's housing allowance included in his calculating of self-employment tax?

Answer:

Yes, a minister's housing allowance is included in the computation of Self-Employment tax.

The calculation for self-employment income on Schedule SE is as follows:
ADD: Cash compensation to minister
ADD: Housing allowance (or fair rental value of parsonage)
SUBTRACT: Form 2106 expenses

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