This information is not intended to replace competent advice from a competent tax professional.

Ideally, housing allowance is be paid outside of the payroll process, in the same manner as if you were paying any other bill.

•The clergy person will get two checks, one for wages (from payroll) and one for housing allowance, using your normal bill paying process (such as a check created using Medlin Accounting Software.

•Keeping payroll just for wages is the best practice.

•If you prefer to pay the allowance through payroll, you can use Expense Reimbursement as one of the 'Adjustments to Income' on the Setup screen.

How is housing allowance added to Form W-2 Box 14 when using Medlin Payroll Software?

•Despite what you may have done in the past - have been led to believe - or even told as being required by law - the IRS does not require housing allowance to be listed on Form W-2.

•To avoid any implication that housing allowance is part of wages, provide the minister a separate housing allowance 'statement' each year, on church letterhead.

•The minister is responsible for properly reporting housing allowance on their tax return.

•The only items which should be on a W-2 are items required by law.

•Adding non-required items provides an additional opportunity for mistakes.