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:
- EnterXinto theMinisterial pension with housing allowancefield on the1099Rscreen.
- Enter the gross distribution amount inBox 1.
- Enter the distribution code inBox 7, along with any other necessary information from Form 1099-R.noteDon’t enter an amount inBox 2a, Taxable amount.
- Fill in the following fields on the1099R-2screen:Designated housing allowance,Actual housing expenses, andFair 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.
