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Retirement

Enter housing allowances for retired ministers

A retired minister may receive rent-free use of a home or a rental allowance in recognition of past services as a minister. They can exclude from their taxable income the lowest of these: the housing allowance, the home's fair rental value, or their home maintenance costs. The taxable amount of any retirement distribution is reduced by the amount of a designated housing allowance.
To enter housing allowances for a retired minister, complete the following steps:
  1. Enter
    X
     into the
    Ministerial pension with housing allowance
     field on the
    1099R
     screen.
  2. Enter the gross distribution amount in
    Box 1
    .
  3. Enter the distribution code in
    Box 7
    , along with any other necessary information from Form 1099-R.
    note
    Don’t enter an amount in
    Box 2a, Taxable amount
    .
  4. Fill in the following fields on the
    1099R-2
     screen:
    Designated housing allowance
    ,
    Actual housing expenses
    , and
    Fair rental value of housing, including utilities
    .
The tax application calculates the excludable portion of the pension and automatically transfers the taxable amount to Form 1040 line 4d. A statement prints with the return to detail the calculation. The taxable and non-taxable portion of the pension also transfers to the Clergy Worksheet 1, lines 5a and 5b, to be included in the calculation of the percentage of tax-free income, if necessary.
note
If you don't want this calculation, enter the gross distribution in
Box 1
, the taxable amount in
Box 2a
, and leave the
Ministerial pension with housing allowance
 field blank. Don’t complete the data entry section
Ministerial Pension with Housing Allowance
 on the
1099R-2
 screen. The taxpayer should have documentation supporting the expenses of providing a home, but doesn’t need to submit the documentation to the IRS.

This article applies to:

  • PRODUCT: UltraTax CS
  • Return type: 1040 Individual
  • Subject: Retirement

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