housing allowance for employee of non profit

[Bucky]

Taxpayer has housing allowance in box 14 of W-2. She is ordained and works for Volunteers of America a non profit. It is not included in wages. My feeling is she need to pay se tax on the amount. The home expenses are over the amount. Do I treat like clergy. Never saw this before on a w-2 employee. Do several ministers.

[Bonnie]

I would treat it same as a ministers W-2 as it sounds like that is how volunteers of America are handling it and you said she is ordained.

[MAMalody]

I see the housing allowance in box 14 of the W-2 all the time. I don't like it to be there, but, it is the place to put of if you choose to report it on the W-2. Assuming Volunteers for America can designate a housing allowance, treat it like normal clergy. Don't forget the the designated amount also must be less than the fair rental value or some of the housing allowance could be taxable as income.

[Burke]

She will owe SE tax unless she can provide you with a 4361 approved by the IRS.

[DaveO]

I have several Chaplin's who get a W-2 for working at a hospital. The housing allowance is part of their salary so FICA tax is already paid. Ask to see the housing letter that should explain it.

[Bucky]

If they are paying FICA and Medicare through the W-2 one would think that the Medicare and FICA would reflect the difference because the housing allowance would not show up in box 1. In this situation that is not the case.

[Lion]

A clergy W-2 would have nothing in Boxes 4 and 6. SE tax is paid. Clergy can request FIT and SIT if they choose. Some choose a high enough amount to cover their SE needs to have close to a zero balance due when they file their returns without making quarterly payments, but quarterly payments are appropriate also to cover their SE and even FIT and SIT needs. Clergy's choice. Housing allowance can be in Box 14 or in a separate letter of agreement or minutes of the church or religious organization or contract or any form that was designated/voted on prior to being paid for that calendar year. Remember that what he actually claims on his return is the lesser of the HA, FRV, or actual housing expenses. If that results in excess HA, the excess gets added back to income.

[MAMalody]

Actually, clergy have no entries in boxes 2 though 6 as a normal course of W-2 preparation. They may not asked to be covered by SS/MC, but that can ask to have income tax withheld and specify an amount large enough to accomodate what the SS/MC would be. (We are actually talking SECA here.) The church is not required to withhold, even if the pastor asks for it. If the church does decide to go ahead and withhold, those dollars would be entered in box 2 of the W-2.