Clergy Housing allowance & 0.00 in box 1 with taxes in box 2.

[nwtaxlady]

My client is a pastor and this year his W-2 has 0 for Wages in box 1. Has taxes withheld in Box 2. And has in box 14 Housing allowance of $14,600.
My software doesn't like that it doesn't have wages and will have to be paper filed. Also, is it ok that the church pays him all in housing allowance and no wages?
Please advise, thanks,

[spanel]

Sounds like someone messed up the W2. Cant have More in Federal W/H than wages. Its okay that there is Housing allowance with no wages. And no, you cannot withhold taxes from Housing Allowance.

Chris

[nwtaxlady]

Sounds like someone messed up the W2. Cant have More in Federal W/H than wages. Its okay that there is Housing allowance with no wages. And no, you cannot withhold taxes from Housing Allowance.

Chris

He knew he would owe and instead of paying quarterly, he had the church pay the taxes for him. My software is not liking the fact of 0.00 for wages in box 1. I am thinking the only work around would be if I just put $1 in box 1. Ugh! You think that would fly?

[TaxGuyBill]

He knew he would owe and instead of paying quarterly, he had the church pay the taxes for him. My software is not liking the fact of 0.00 for wages in box 1. I am thinking the only work around would be if I just put $1 in box 1. Ugh! You think that would fly?

I think it won't work unless Box 1 is the same or higher than Box 2.

It might need to be mailed.

[spanel]

I think it won't work unless Box 1 is the same or higher than Box 2.

It might need to be mailed.

My question is what did they withhold taxes from?? You cannot withhold taxes from housing allowance. Your taxpayer should be paying in estimates...

Chris

[TaxGuyBill]

My question is what did they withhold taxes from?? You cannot withhold taxes from housing allowance. Your taxpayer should be paying in estimates...

Chris

I agree. They must have withheld from the Housing Allowance, as that was the only income. And now that I think about it, I'm wondering if that would void the tax-free benefit of the Housing Allowance (it was not being used for Housing).

[spanel]

I agree. They must have withheld from the Housing Allowance, as that was the only income. And now that I think about it, I'm wondering if that would void the tax-free benefit of the Housing Allowance (it was not being used for Housing).

I like your thinking as how could it have been used as it was sent to the IRS??

Chris

[TAX4US]

In my neck of woods HA is based on FMV of property and never paid in cash to the clergy. I too wonder if it would violate the not taxable principle.

[nwtaxlady]

I agree. They must have withheld from the Housing Allowance, as that was the only income. And now that I think about it, I'm wondering if that would void the tax-free benefit of the Housing Allowance (it was not being used for Housing).

He fills out the worksheet for the church for housing expenses. His housing allowance is only $14,600 and his acutal expenses are far more than that. I did advise him not to do that arrangement anymore. He's going to pay the estimated taxes or have his wife increase her withholding.

[DoubleO]

It doesn’t speak well for the pastor that he is so undisciplined he cannot be responsible for paying his own estimated and puts more work on the church treasurer. Can he just have amount w/h each week, then treasurer reimburse him at ES tax time. Still more work for treasurer.

[nwtaxlady]

It doesn’t speak well for the pastor that he is so undisciplined he cannot be responsible for paying his own estimated and puts more work on the church treasurer. Can he just have amount w/h each week, then treasurer reimburse him at ES tax time. Still more work for treasurer.

WOW!! The treasurer had no problem doing it. If it makes you feel better, the treasurer will no longer be doing it now. We have other ways to get the taxes paid. Hope your happy.

[DoubleO]

WOW!! The treasurer had no problem doing it. If it makes you feel better, the treasurer will no longer be doing it now. We have other ways to get the taxes paid. Hope your happy.

Whether treasurer minded or not, still speaks to the lack of discipline on the part of the pastor. If I were a congregant at that church, I’d be raising my eyebrows. If there was a salary to withhold from, it might be different if pastor was not the only employee, but to have fed or state withholdings when only paying housing to the pastor creates problems.

The OP attests to this.