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Level 3
June 1, 2024
Question

Clergy W2 Clarification Housing Allowance SE Tax

  • June 1, 2024
  • 1 reply
  • 6 views

I have limited experience or a lack of confidence.  Any guidance would be helpful.

 

I believe the W2 is incorrect and before I request a W2C to be prepared I want to be sure.

 

Box 1 currently contains his gross salary.  I believe it should be reduced by the amount of the housing allowance. Example $77400 less Housing Allowance $30000 = $37400.  Later I will ask about how this impacts SE Tax, Child Tax and Earned Income Tax Credits.

Box 2 Tax Withheld Not sure if this was based on the Gross or Net amount of the Housing Allowance but I believe it should be based on the net amount.

 

Box 3 and 5 Social Security and Medicare Wages should be blank Box 4 and 6 tax withheld should be 0 but it is not. How do I reflect this on the tax retrun or does the organization need to file an amended 941X?

 

Box 14 I believe should reflect the housing allowance of 30000.

 

Box 15 'box 16 and box 17 State income and tax for PA I believe should be the gross income of .0307 %. PA does not exempt housing allowance for tax withheld.

 

Box 18 and 19 local tax.  Based on the website and a conversation with an employee of the local tax office.  This should reflect net amount of the housing allowance.  When the local return is filed a refund should be due.

 

I recognize this is a lot of detail and I hope someone in the community can guide me so as to avoid any challenges after filing the return and to have future withholding and W2 to be done correctly.

 

This topic has been closed for replies.

1 reply

Level 15
June 4, 2024

Box 1: Yes.

Box 2: It should be based on Box 1.  But whatever it says was what was actually withheld so there isn't any changing that now.

Boxes 3-6: Yes, they should be zero if this is clergy.  Social Security and Medicare taxes are paid on Schedule SE (unless the taxpayer elected out of the Social Security system).

Box 14: Yes, it should note the housing allowance there.

Box 16:  Yes, if PA taxes the housing, then the gross taxable income should be in Box 16 and then box 17 should be based on Box 16.

Box 18 and 19:  I have no idea.