CLERGY HOUSING ON 1099 R

[Marie]

How is this put on the 1099 input form?  On w-2's there is a place to mark clergy, but can't find that on the 1099r, or anything associated.

On the 1099 R, The box (2B )is marked that taxable amount is not determined and the taxable amount box (2a) is blank.

Is there a worksheet for the housing for a 1099R like there is for a W-2?

 

[BulldogTom]

This is a new one to me....   How can someone who is retired get an employment benefit (housing allowance).   Is this possible?   If always figured when you retired you lost the housing allowance benefit.

Tom
Modesto, CA

[jasdlm]

I believe you just subtract the housing allowance portion from the gross distribution box and enter what is actually taxable, if anything, in 2a.  If the minister is actually retired, no SE, but if the minister is not retired, I think you have to consider whether subject to SE.

 

[Jack from Ohio]

Housing allowance is NOT reported on 1099-MISC.  This needs to be corrected.  It can be information in box 14 of the W-2, or just an official letter from the church stating how much is deemed as housing allowance.

It is then entered into the Clergy Worksheet.

[Gail in Virginia]

I have had a couple of retired ministers, and I do it basically the way JASDLM describes.  I do ask them for their actual expenses/ rental value as well and use the lesser of the three, just like with a working minister.  Usually the portion they have designated is the least  but it doesn't hurt to be sure.  As far as I know their are no clergy worksheets to go with the 1099R, at least not in ProSeries.

[jasdlm]

1 hour ago, Jack from Ohio said:

Housing allowance is NOT reported on 1099-MISC.  This needs to be corrected.  It can be information in box 14 of the W-2, or just an official letter from the church stating how much is deemed as housing allowance.

It is then entered into the Clergy Worksheet.

OP said 1099R.  I agree with you on the 1099-Misc.  To clarify, my comment above refers to a 1099R.

[BulldogTom]

So you are telling me that a retired minister can claim housing allowance after retiring?   It seems like this is what you are all saying.  I have never heard of this before.   Does it ever expire?   Does it have to come from retirement contributions while a minister?

You learn something new every day.

Tom
Modesto, CA

[jasdlm]

Tom - there are specific rules.  Many of the conferences have 'blurbs' about it in their ministers guides or some such thing.  Copied below is one of the Lutheran 'blurbs' because I don't know how to attach a .pdf.

We have a few clergy experts on this board - MAMalody, JJstephens, and I think there is at least 1 more.  They can explain it far better than I can.

I think all of the conferences/denominations school their clergy in these rules, because the Ministers definitely know about it ;).

 

Retired Ministers – Housing Allowance If you are a retired minister of religion and at the time of your retirement your name appeared on an LCMS official roster of ordained or commissioned ministers, you may exclude eligible housing expenses from taxable retirement distributions reported on your federal tax return if certain conditions are met. Benefits earned while a minister are eligible for housing allowance exclusion when distributed to a retired minister. To be considered “retired” for this housing allowance exclusion depends on a minister’s specific circumstances. Ministers who are uncertain whether they are “retired” for this purpose should consult with a tax advisor to discuss the facts and circumstances involved in their individual case. The relevant issues involved in determining “retired” status are beyond the scope of this brief summary and are specific to each individual. Please note that if you are receiving an “in-service” benefit from the CRP, you are not considered to be retired for purposes of claiming a housing allowance exclusion on the CRP in-service payments distributed to you. If you are eligible to claim the housing allowance exclusion on retirement benefits and your eligible housing allowance expenses equal or exceed the amount you listed on Form 1040 Line 4a, then enter $0 on Form 1040 Line 4b. If you did not use the entire distribution as housing allowance, then enter the unused amount on Form 1040 Line 4b. The housing allowance exclusion applies only to those retirement benefits earned while a rostered worker. It does not apply to any benefits you might receive as a result of some other member’s participation in one of these plans or survivor benefits you or your spouse may receive. While the Internal Revenue Service has granted retired ministers this exclusion on their own retirement benefits, it does not extend to beneficiaries of a retired minister or survivor benefits paid to a retired minister. If both you and your spouse are considered retired ministers of religion, only one of you will be allowed to take the housing allowance exclusion unless your eligible housing expenses exceed the total retirement distribution amount received by that one person. In that case, the additional excludable amount can be applied to the retirement amounts received by the other retiree. It is equally important to remember that while benefits from retirement plans are reportable and taxable (minus applicable exclusions) as far as your federal and state income taxes are concerned, they are not reportable or taxable for Social Security purposes. You are not required to pay any Social Security or Self-Employment tax on any retirement benefit received from the CRP or CRSP. For more information of interest to ministers, go to www.irs.gov for a copy of Publication 517. Publication 517 contains details on housing allowance, social security, taxable ministerial income and includes various worksheets that you might find helpful.

[JohnH]

I agree with jasdlm and Gail.  Retired ministers can indeed benefit from the H&U allowance.  They must file paperwork with the pension plan designating ALL their pension benefit as H&U allowance.  The 1099R will show the gross benefit, but there will be no entry in the  "Taxable Amount" box.  (That is the clue that they have filed the paperwork to designate the H&U allowance).  The H&U amount excludable from income is subject to the same rules as those for employed clergy - lower of 1) amount actually designated; 2) amount actually spent; 3) FRV of the residence, fully furnished and with all utilities paid. In most cases, this is why they should just designate the entire amount as excludable and then make the calculation for 2 & 3. 

They then attach a worksheet to the return showing the total payments per the 1099R, a reduction for the amount actually spent for H&U expenses, and the net taxable retirement benefit.  I show those calculations on the worksheet in summary form only.  I also photocopy the 1099R onto the worksheet.  

-->  Incidentally, there is no requirement for the H&U allowance to appear on the tax document (whether it is a 1099R or w-2).  The box 14 entry on the W-2 is informational only.  Even if it is missing, the HU& allowance is still excludable if the other conditions are met. <---

[Marie]

OK, THANKS

[Marie]

I've removed taxable amount in that box.  1099R in a separate box states 100% housing, and I know it is, just had never had a retired minister with a 1099R, just active ministers with houseing allowance. The minister also has more housing expenses than retirement.  He tracks that very well

 

 

[Medlin Software, Dennis]

From the payroll side, HA is an item often handled incorrectly.  The exception are the larger entities which have accounting services or guidelines.  The experts I trust are adamant about handling it correctly, not "how it has always been done".  Have a board meeting annually in Dec.  Authorize HA for the next year, and create report for the year ending.  Document to the clergy person on letterhead one one page (together) or separately) two pages.  Never report to clergy person on any government form to help prevent issues (which will usually come back to the church to help resolve).

Many believe the ability to report anything on W2 14 means HA MUST be reported that way...

This thread reminds me to check on the status of HA as there was a case working its way up which could have eliminated HA, so much so that some were advising clergy to bank funds to pay taxes on the amount.

[JohnH]

That case was resolved (for now) on March 15, 2019 in favor of leaving the HA benefit in place "as is".

https://www.ecfa.org/Content/Major-Court-Victory-for-the-Ministers-Housing-Allowance

It's resolved until the next lawsuit begins. The opponents are never going to give up on this issue.

 

[Medlin Software, Dennis]

Thanks for the update.  I expected the bene to remain in some form, whether as is, or via some other code section being ruled applicable.