Tax Law (Questions About Taxes)/Housing Allowance

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QUESTION: Hello,

I have a question about minister's housing allowance.  I want to know if I can retroactively undeclare housing allowance.  

I am a full time minister with IRS 4361 status and have declared a housing allowance for the past 7 years.  This year my income was so low that if I declare the housing allowance that my employer placed in box 14 of my w2, my tax refund diminishes by almost $2000 due to lack of income.

Is it ok to ask my employer, a ministry, to send in a w2-c to amend my w2 so that I have no housing allowance declared?

In effect it would the amended W2 would move the few thousand reported in box 14 of the w2 for housing and add it to box 1 of the w2 so that my income reported wouldn't be so low.

I have not been able to find information on this specific topic because it seems very rare for something like this to happen.

ANSWER: Ryan,

Thanks for your question.

A housing allowance can be amended, but only prospectively.  I cannot be amended retroactively.

Hope this helps.

John Stancil, CPA

---------- FOLLOW-UP ----------

QUESTION: Is there anyway to amend my W2 so that all of my income is in Box 1 of the W2 and not declare any housing allowance in Box 14?  I know you can't retroactively declare more housing allowance for the past, but can I decide not to use any of the prospectively declared housing allowance for the year?  

To me it seems like the prospectively declared housing allowance at the beginning of each fiscal year establishes an amount of housing allowance you can decide to take or not take .  Since I had already prospectively declared a housing allowance in 2012 does it mean I have to use it at all?  



I had around $30,000 in prospectively declared housing allowance in 2012.  If we had used all of the $30,000 in box 14 it would have wiped out my box 1 income all together.  Only a few thousand was taken out for housing allowance in my current W2 box 14.

In effect it seems like we can change the amount of housing allowance in box 14 to anything from $0 to $30,000 as long as it is under $30,0000.



To me it seems like prospectively declared housing allowance is like money in the bank that you don't have to use if you don't want to. You just have to make a deposit(declaration of housing allowance) at the beginning of the year in order to be able to make a withdrawal(box 14 of the W2) for up to the amount of declared housing allowance.  So a deposit is necessary, but a withdrawal is not.



Is this banking analogy correct?

Answer
No, it does not work that way.  You declared $30,000 for housing allowance at the beginning of the year.  You made no changes to it during the year, so the W-2 should reflect $30,000.

If you did not spend $30,000 in housing during the year, the amount not used would revert to salary.  However, if you did spend $30,000 in housing during the year, and counted some of it as salary, you would be filing a false return.

John Stancil, CPA

Tax Law (Questions About Taxes)

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John Stancil, CPA

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I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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