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V
VaajPovKhaab
January 29, 2025
Question

403(b) and Housing Allowance

  • January 29, 2025
  • 1 reply
  • 0 views

I'm creating a W-2 for a pastor and I am wondering if the pastor's 403(b) and housing allowance can be subtracted from his total income.

    1 reply

    S
    SabrinaD2
    January 29, 2025
    • Elective 403(b) employee contributions are normally excluded from Box 1 (Taxable Wages) but must be reported in Box 12, Code E. If the pastor did not opt out of Social Security, these contributions are still subject to FICA taxes and should be included in Box 3 (Social Security Wages) and Box 5 (Medicare Wages). (IRS Pub 571, TurboTax Guide)

     

    • Housing Allowance: A qualified housing allowance is excluded from Box 1 (federal taxable income) but subject to FICA taxes if the pastor is under Social Security. It should be reported in Box 14 as “Housing Allowance” for informational purposes and included in Boxes 3 & 5 if FICA applies. IRS Topic no 417, TurboTax Earnings for clergy
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