Ministers and clergy members must complete a special worksheet in the program to correctly calculate Self‑Employment (SE) tax and report parsonage or housing allowance. Follow the steps below based on whether you receive a church‑owned parsonage or a housing allowance.
📍 Where to Enter Clergy Information
- Go to Federal Section
- Select Other Taxes
- Select Self‑Employment Tax
- ✔️ Check the box for Minister/Clergy
- Click Continue
- Complete the Clergy Tax‑Free Income Worksheet
🧾 Clergy Tax‑Free Income Worksheet – What to Enter
Gross Income
You must enter your total gross income from the return manually.
➡️ This amount is not automatically pulled from your W‑2.
🏠 If You Receive a Church‑Owned Parsonage
Check the box indicating the church provides a parsonage, then enter:
- 🏡 Fair Rental Value (FRV) of the parsonage
- 💡 Annual Utility Expenses
- If you have a utility allowance in your employment agreement, enter that amount here as well.
🏠💸 If You Receive a Parsonage/Housing Allowance (Church Does Not Own the Home)
Provide the following:
- 🏡 Fair Rental Value of the home
(Include utilities if applicable.) - 💸 Annual Housing or Parsonage Allowance Received
- 🧾 Actual Annual Housing/Parsonage Expenses
✔️ Optional but Recommended
- Utility allowance (if provided)
- Actual expenses (supporting documentation required if audited)
Even though utility allowance and actual expenses are not required for the SE tax calculation, include them when applicable so the return is complete.
Note: Exclusion cannot exceed actual expenses
📊 Where Your Parsonage Shows Up on the Return
💼 Self‑Employment Tax Calculation
Your total income subject to SE tax (wages + taxable parsonage) appears on:
- Schedule SE, Line 2
To see how the software calculated this amount:
📄 Go to Summary/Print → open the PDF → look for Worksheet 3.
🧾 Income Tax Portion of Parsonage
If any portion of your parsonage is taxable, it will carry to:
- Schedule 1, Line 8z – “Other Income- Taxable Clergy Parsonage”