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Screen Clergy - Minister, Clergy, and Religious Workers (1040)
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Overview
Use this screen to calculate taxable ministerial income, deductions, and the net self-employment income for ministers, members of the clergy, and religious workers. The application also uses information in the following screens to complete the Clergy Worksheets.
Folder | Screen |
|---|---|
Income | W2 |
Business | C |
Retirement | 1099R, 1099R-2 |
The
C
screen is classified as minister units when Minister, clergy or religious worker
contains an X
. The W-2
screen is classified as a minister unit when Wage code
contains code 1
. The 1099R
screen is classified as a retired minister unit when Ministerial pension with housing allowance
contains an X
.Parsonage or Allowance Housing Information
Use this section to enter information needed to calculate the percentage of tax-free income and deductions for Schedule C (or C-EZ). This section is also required for the calculation of an excess housing allowance. Any housing allowance that exceeds the fair rental value of the home plus utilities or the amount actually used to provide a home is included in gross income. When the
Parsonage provided by church
section is complete, the application defaults to using any housing allowance on the W2
screen, box 14, code 2
, as a utilities allowance provided in addition to a parsonage. When the Parsonage or rental allowance provided by church
section is complete, the application defaults to using the W2
screen, box 14, code 2
, amount as a parsonage allowance.State
Amounts entered in either of the
Utilities allowance...
fields in the Parsonage or Allowance Housing Information section of the Clergy
screen are allocated to the state in this field. If this field is blank, the application allocates the Utilities allowance...
fields to the resident state.If the statement for box 14 in the
W2
screen contains 2
(Housing allowance) amounts, the application accumulates those amounts for the taxpayer and spouse based on the postal code in State
in that statement. If the postal code is blank in the box 14 statement, the application allocates the amount to the resident state. If Parsonage allowance (Force)
in the Clergy
screen contains an amount, the application ignores amounts in the W2
screen and uses the postal code in State
in the Clergy
screen for state allocation of the amount in Parsonage allowance (Force)
.Type of housing provided for services (Force)
- If this field is blank, the application completes the section of Clergy Worksheet 1 based on data in theParsonage provided by churchorParsonage or rental allowance provided by churchsubsection in theClergyscreen. If both sections contain data, both sections of the worksheet will calculate and any housing allowance with code2in theW2screen, box 14, is reported as a parsonage allowance on Clergy Worksheet 1, line 4a.
- If you select1, the application completes only the Church Provided Parsonage section of Clergy Worksheet 1. Enter data in theParsonage provided by churchsubsection in this screen. The application ignores any data in theParsonage or rental allowance provided by churchsubsection.
- If you select2, the application completes only theParsonageorRental Allowancesection of the Worksheet 1. Enter data in theParsonage or rental allowance provided by churchsubsection in this screen. The application ignores any data in theParsonage provided by churchsubsection.
Fair rental value of parsonage provided by church
Enter the fair rental value (FRV) of the parsonage provided by the church furnished as part of earnings. FRV is defined in IRS Publication 517 as "As determined objectively and between unrelated parties, what it would cost to rent a comparable home (including furnishing) in a similar location." This amount is reported on Clergy Worksheet 1, line 3a.
note
Don't include any utility allowance received in the FRV. Use
Utilities allowance provided in addition to parsonage
.Utilities allowance provided in addition to parsonage (Force)
Use this field to override (force) the calculated utilities allowance amount. This amount is reported on Clergy Worksheet 1, line 3b. When this field is blank and the
Parsonage provided by church
section is completed, the application reports amounts that are entered and coded 2
(housing allowance) in the statement attached to box 14 in the W2
screen for all minister units of the W2
screen. The W2
screen with code 1
entered in Wage code
are classified as a minister unit.note
- Any excess utility allowance calculated on Clergy Worksheet 1, line 3e is automatically reported on Form 1040, line 1.
- Don't enter a utilities allowance that's provided with a parsonage allowance. Use the field in theParsonage or rental allowance provided by churchsubsection instead.
Actual parsonage utilities expense
Enter the actual utility cost for the year. This amount is reported on Clergy Worksheet 1, line 3c.
note
Any excess utility allowance calculated on Clergy Worksheet 1, line 3e is automatically reported on Form 1040, line 1.
Parsonage allowance (Force)
Use this field to override (force) the calculated parsonage allowance amount. This amount is reported on Clergy Worksheet 1, line 4a. When this field is blank, and the
Parsonage or rental allowance provided by church
section is blank, the application reports amounts that are entered and coded 2
(housing allowance) in the statement attached to box 14 in the W2
screen for all minister units of the W2
screen. The W2
screen with code 1
entered in Wage code
are classified as a minister unit.Utilities allowance, if separate from parsonage allowance
Enter the utilities allowance provided separately from the parsonage allowance. The allowance will need to be furnished as part of earnings. This amount is reported on Clergy Worksheet 1, line 4b.
note
- Any excess allowance calculated on Clergy Worksheet 1, line 4i is automatically reported on Form 1040, line 1.
- Don't enter a utilities allowance, if provided in addition to a parsonage. Use the field provided in theParsonage provided by churchsubsection.
Actual parsonage expense
Enter the actual parsonage expense for the year. This amount is reported on Clergy Worksheet 1, line 4d.
note
- This field is required to accurately calculate any excess allowance.
- Any excess allowance calculated on Clergy Worksheet 1, line 4i is automatically reported on Form 1040, line 1.
Fair rental value of home
Enter the fair rental value (FRV) of the home. FRV is defined in IRS Publication 517 as "As determined objectively and between unrelated parties, what it would cost to rent a comparable home (including furnishing) in a similar location." This amount is reported on Clergy Worksheet 1, line 4g.
note
- This field is required to accurately calculate any excess allowance.
- Don't include the cost of utilities in this field. UseActual utilities expenseinstead.
Actual utilities expense
Enter the actual utility cost for the year. This amount is included on Clergy Worksheet 1, lines 4e and 4g.
note
- This field is required to accurately calculate any excess allowance.
- Any excess allowance calculated on Clergy Worksheet 1, line 4i is automatically reported on Form 1040, line 1.
Self Employment Information
Form 4361 filed with IRS
Enter
X
if Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, has been filed with the IRS for the taxpayer and/or spouse. If X
is entered in this field, the message "EXEMPT-FORM 4361" prints on the line to the left of Form 1040, Schedule 4, line 57.Minister W-2 salary (Force)
Use this field to override (force) the calculated minister W-2 salary. This amount is reported on Clergy Worksheet 1, line 1. When this field is blank, the application reports the amount in
Wages, tips
on the W-2
screen when code 1
is entered in Wage code
. The total of all minister W-2 units is reported on Clergy Worksheet 1, line 1.Self-employed minister deductible contribution to a 403(b) plan
Enter the amount of a deductible contribution made by a self-employed minister to a qualified 403(b) retirement plan. This amount transfers to Schedule 1 (Form 1040 or 1040-SR), line 15. The application doesn't calculate any limitations or maximum contributions for this field. See Pub. 571 for information on figuring the maximum amount contributable (MAC) and specific information for self-employed ministers. For a chaplain who isn't required to complete the Clergy Worksheets, use the statement
Other adjustments
on the OtherAdj
screen in the 1040 Adjustments folder to enter deductible contributions to a 403(b) plan, Type code 5, that transfer to Schedule 1 (Form 1040 or 1040-SR), line 22.Unreimbursed Bus Exp - net reimburse and after 50% M&E reduction
Enter the unreimbursed employee business expenses incurred by a minister or clergy member. The unreimbursed expenses will reduce the net self-employment income reported on Schedule SE.