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Shantel72
January 9, 2021
Question

How do I enter a Housing Exclusion for Clergy? This is not an allowance but an exclusion on reportable income at end of the year on their w2.

  • January 9, 2021
  • 2 replies
  • 0 views
Need help if anyone knows how to enter this into Online Payroll. This amount is included in Box 14 as Housing Exclusion and reduces the box 1 reportable income. It is not deducted from their salary as they are paid throughout the year.

    2 replies

    S
    ShiellaGraceA
    January 9, 2021

    You've come to the right place, @Shantel72.

     

    I'm more than happy to walk you through the steps on how to record your clergy housing exclusion. You can choose between Clergy Housing (Cash) or Clergy Housing (in-Kind). The taxability of the two clergy housing pay types is identical, and both will show in box 14 of Form W-2. Let's go to your employee's profile to set up.

     

    Difference between the two:

     

    • Cash: A ministry gives funds to a clergy member through payroll to pay for their own housing. 
    • In Kind: A ministry provides housing to a clergy member and only needs to report the amount on Form W-2 without increasing the net of the paycheck.

    To set up:

     

    1. Go to Workers, then hit Employees.
    2. Choose an employee and Edit employee.
    3. Select the Pencil icon next to Pay.
    4. Under How much do you pay Employee?, tick Add additional pay types.
    5. Click Even more ways to pay Employee.
    6. Choose either Clergy Housing (Cash) or Clergy Housing (In-Kind).
    7. Hit Done.

    You can refer to this article to guide you along the way: Clergy and church payroll.

     

    Additionally, here's a link that covers all tasks you can do when using the payroll feature.

     

    Feel welcome to message me if you still have questions or concerns with payroll. I'm always here to assist you. Stay safe and have a great day ahead.

      S
      Shantel72Author
      January 9, 2021

      Thank you but that doesn't work. I currently have it set up as Housing Allowance in Kind as she doesn't' receive any additional funds.  But when I run the W2 it does not reduce the taxable income by that amount.

      This is a Housing Exclusion, not an allowance.  So she receives a Salary that we then pull payroll taxes out of during the year.  However, at the end of the year, she is allowed to "exclude" a portion of her taxable income as Housing costs - this is reported in Box 14 but is noted as housing exclusion.  This is what I am trying to get set up. If you go to this link it will show you the difference between housing allowance and housing exclusion on a clergy W2.

      https://www.westohioumc.org/sites/default/files/conference/documents/pdf/page/2020-clergy-example-w2_0.pdf

      M
      MaryAnn_E
      January 10, 2021

      Hi there, @Shantel72.

       

      Please contact our Payroll Support so they can check your payroll data and assist you further. This way they can check for a correction on the W-2 form.

       

      Let me guide you on how to reach them.

       

      1. Go to (?) Help, then Contact us.
      2. In What can we help you with? field, enter a brief description of your issue.
      3. Click Let's talk.
      4. Snap the Get a callback button.

       

      Should you not see the option for Get a callback, you can toggle the option by entering Support in How can we help?.

       

      I'm also attaching this article for your reference: Commonly used articles to get started with Payroll.

       

      In addition, you can find articles that cover common questions in QuickBooks Online at the following link: Helpful Articles.

       

      Fill me in if you have other questions and concerns. I'd be glad to help. Thank you for posting and have a good day.

      S
      Shantel72Author
      January 16, 2021

      I just wanted to confirm with everyone in the community that a Housing Exclusion is not possible through QuickBooks online payroll.

      J
      Jay61CPA
      October 26, 2022

      I know I'm late to the party, but more needs to be said.

      I am a CPA and have been doing minister's taxes for 40 years now. 

      "Housing allowance" and "housing exclusion" are being used in this post in a way that is "proprietary" (for lack of a better term) to this conference of churches, but not having the meaning that is generally understood based on the tax law.  The IRS language is that the minister may receive an "allowance" which is "excluded" from income.  The "allowance" is "excluded" -- it's the same thing. 

      But this conference of churches, on the other hand (see the original poster's link), uses the terms as: the church pays the minister a housing "allowance" but also designates an additional amount of the minister's cash salary as housing "exclusion".

      The IRS rule is that the amount excluded from income cannot exceed "the amount officially designated (in advance of payment) as a housing allowance" (this is one of several limitations).  Thus I hope that both the amounts mentioned (the housing "allowance" and the housing "exclusion" have been "officially designated (in advance of payment) as a housing allowance."

      But I digress from the point.  It is called an "exclusion"; that portion must be excluded from the minister's compensation (cash salary paid to Pastor ... in your parlance) in your setup, and added to the housing "allowance" category.  Contrary to the conclusion drawn earlier, QuickBooks can handle this exclusion; just by excluding the "exclusion" from the cash compensation category and adding it to the housing "allowance" category.  For internal budgeting reasons you might have two categories, one called "allowance" and one called "exclusion".  But for payroll reporting, they are the same thing: an amount you have excluded from wages and paid as a housing allowance.  (And, like a good preacher, I've just reiterated the same thing three times, using slightly different words.)

        T
        TessBranham
        January 16, 2023

        Hi

        So basically if we put it in additional pay types, Clergy Housing (cash), it will populate it into the correct box on the W2 (box 14)?

        If the pastor takes only housing and no salary, is there a way to get QBO to do this? Do you know?  It is asking me to put a salary in.

        Thanks

        TB

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