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Ministers - Housing allowance included in "earned income" for EITC and CTC?

My old notes say:

The housing allowance is included in the EITC and Child Tax Credit definitions of earned income. See Internal Revenue Code § Sec. 24(d)(1) and Sec. 32(c)(2)(A)(ii).

Employees are treated somewhat differently than self-employed individuals. Sec. 32(c)(2)(A)(i) provides that wages, salaries, tips and other EMPLOYEE compensation are considered to be earned income, but only if the amounts are includible in gross income. However, Sec. 32(c)(2)(A)(ii) provides that the amount of earnings from self-employment under Sec. 1402 are automatically included in earned income for EITC and CTC purposes -- even if the amounts are not included in gross income. So there you have it -- self-employed persons who have non-taxable SE earnings are required to include such earnings in the definition of earned income for EITC and CTC purposes.

Has this changed or been rescinded? I don't think my Lacerte software is taking this into consideration and is leaving off the Housing Allowance from "earned income" for purposes of calculating the EITC and the CTC.


    There are a great number of variations. If I find one that works for my situation (Like illni has) then I write all of that in the client notes, so I can recall how to do it next year.)

    Hopefully you have all tried the Ask Lacerte box in the program I used "minister exempt se eitc"  and got several helpful linkls that may work for your situation.

    If you do find relief in one of these, or it gets you in the right direction with an appropriate tweak, post that here to help others with the same situation.

    Have you called customer support? What was the result?

    This is where users help users (hopefully), regardless of what Intuit does.

    • Received a response from Lacerte customer support.  I had only seen the "earned income" line in the EIC section of screen 39.  I didn't realize there was a second one listed just below in the Child Tax Credits section.  When I entered my housing allowance minus 1/2 SE tax (as I understand it) I got my credit on Form 8812.  Lacerte indicated they don't have the ability to detect what income should qualify (although I think housing allowance appears rather obvious as long as it's taxable for SE tax) so they provided the adjustment field to force the amount of earned income.  Thanks everyone for all of your help.

    I am having the same problem.  Has anyone found a solution to this?


      Does this discussion help?

      • So are you forcing the Earned Income somewhere  in Lacerte to include the housing allowance in the calculation of either EIC or the refundable child tax credit?
      • Yes, screen 39 -- "earned income" -- I add back the Housing allowance as of 1/01/2011,per code § Sec. 24(d)(1) and Sec. 32(c)(2)(A)(ii).
      • I  entered the housing allowance on screen 39, but it stlll does not show up on Form 8812 and no refundable child tax credit is calculated.
      • TRY USING SCREEN 45.
      • Unfortunately that just doubles the SE tax by doubling the housing allowance I already have entered from the W-2 box 14.It is very frustrating.  Maybe I'll try asking Lacerte why it is not figuring into the fform 8812 and see where that leads.
      • Finally have some time. I do the following steps -- it is a pain in the [removed] too! I wish Lacerte worked better than it does for these types of returns! Instructions for Minister with Housing Allowance and Exempt from SE tax; after January 1, 2011: 1. Make sure the W-2 check box is checked for "minister subject to SE Tax  Housing Allowance" (stay with me here, there's a method to my madness) 1A. Enter any wedding, funeral etc. fees on schedule C along with any direct costs associated with the income earned. 1B.  Enter all other non-reimbursed employee expenses on the form 2106 expenses (if any) 2. Enter actual Housing expenses on SE tax input screen 45, make sure code 1 is removed from "Form 4316". 3. Compute the "non-deductible portion by looking at Form 2106 worksheet/statement + Form SE worksheet/statement. See "statements" page 1 - Print them out for future reference and your workpapers. 4. Since minister has elected exempt from social security,  remove the step 2 information. 5. Use 2106 worksheet to adjust 2106 expense to match original computation. Just input as a negative and label it as an adjustment. 5A. NOW remove Housing Allowance from W-2 Screen 10 and Uncheck the "minister's wages for SE Tax" box. 6. Add Total Housing Allowance to EIC "taxable earned income" screen 39 -  per IRC 32(c)(2)A(ii) 7. Put back SE tax code "1" for Form 4361 exempt from SS. Try it, it might work OK for you -- I wrote it down after getting tired of how to remember it each year for various clients! Lacerte -- if you are lurking here -- please try to fix this for us so it is not so difficult.  
      • Thanks for sharing.  That is quite a process, although in my case my minister is not exempt from SS.  Thanks.
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