Minister's housing allowance

[cyndycpa]

i have several ministers who work for a religious college.  The school allows them to designate a housing allowance.  The seminary withholds the SS & MC taxes on the housing allowance and remits it to IRS.  On the W-2 worksheet I have input the housing allowance and the housing expenses and have NOT marked any box for paying self employment tax on the housing allowance or W-2 wages.  However Pro-Series automatically calculates and imposes SE tax on the housing allowance, remember NO boxes are checked for Pro Series to do this.  How can I get the program to not impose the SE tax on the housing allowance?

[PATAX]

If you cannot correct that is it possible to override it? Then you may have to disable error conversion check box before wiring it.. Not sure... just my opinion

[clergy tax consultant]

This is a common error amongst churches, parachurch organizations and seminaries. First, I would inform your client of the error since ultimately they are responsible for following the IRS laws. Some churches, etc. simply refuse to follow the law, sadly. The client can then approach their employer and advise them of the error. Sometimes it is simply because they are unaware. IF the employer refuses to correct their handling of the social security tax, I document such in my file to protect myself. Then in order to get the software to handle the numbers correctly you have to NOT enter the housing in as a housing allowance. You have to enter it in as untaxable income. The software will not allow a housing allowance AND FICA for the same person because it recognizes that it is incorrect.