Calculate the percentage of tax-free income for a minister
According to IRS Publication 517, you need to reduce certain expenses and deductions for ministers by the percentage of tax-free income received. Tax-free income includes housing, parsonage, and utility allowances.
Use Worksheet 1, Figuring the Percentage of Tax-Free Income, in the Clergy folder in Forms view to figure the percentage of tax-free income.
Follow these steps to calculate the percentage of tax-free income for a minister.
- Enter the minister's wages in the Income folder and any parsonage or allowance items on theClergyscreen in the Taxes folder.
- Enter the minister's church-related income on Schedule C, using theCscreen in the Business folder.
- Go to theClergyscreen in the Taxes folder. Enter any other information not entered elsewhere to complete Worksheet 1. Make sure to enter theFair rental value of the home.
- Go to Forms view to access the clergy worksheets. Worksheet 1 will calculate the minister's percentage of tax-free income to use in the other clergy worksheets.
