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I have a pastor who gets a W2 with  $30,424.00 in box 1 for wages that flows to his Schedule C.  Box 14 is $21,976.00 for his housing allowance (his own house).

I have marked the W2 as clergy in special type (wages) and marked statutory employee in box 13 flowing to Sch C, so his line 1 on his 1040 shows 0 and he shows a profit on his Schedule C.

His Sch SE shows the entire $ 52,400.00 because his housing allowance is subject to SE Tax, but not withholding tax. 

The problem is that he has 4 children and should be receiving some EIC but no where on the Sch EIC (1040) worksheet will it allow my to back out the $21,976.00 from his housing allowance so it EIC will calculate. 

The only way I seem to be able to get it to calculate EIC is to put $ -21,976.00 on line 1 of the EIC worksheet, and $21,976.00 on line 4.  Line 8 calculates as $21,976.00 and line 10 calculates as $-43,952.00.  Unfortunately this is putting $-43,952.00 on his Sch EIC Step 5, line 2 (Earned Income from worksheet), and trying to put anything on line 5 makes it calculate incorrectly as well. 

This doesn't feel right, so I called ATX support and the person helping me had no idea how to make this adjustment.  

Does anyone else have clergy and this situation?  Where should I be making the housing allowance adjustment on the EIC worksheet?

 

 

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Look at the Schedule EIC Questions, Step 5 #1.  That should be Yes.  You may have to jump to the last worksheet on the schedule or just scroll over to it past worksheet A, worksheet B, Investment inc. then Earned Income.  #1 should be $30, 424 and #4 should be $30,424.  When I tested this (my clergy client does not qualify so I input your numbers with 2 children), on the 1040, page 2, line 18a had a credit and 'Clergy' in small type next to it.  No finagling required.  Hope this helps!

 

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When I put his W2 box 1 income of $30,424.00 on line 4 of the Sch EIC worksheet that shows: 

'Clergy: If you are a member of the clergy who files Schedule SE and the amount on line 2 of that schedule includes an amount that was also reported in 'Wages' on Form 1040, enter that amount......

It gave me my EIC.  That seemed to be the missing piece of the puzzle for me.  Does that seem right to you?

I called ATX twice with no help!

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