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14200: 1040 - EF Message 6266 - Clergy Business Use of Home

1040 Individual

I am receiving EF Message 6266 regarding Clergy calculation not being supported. How can I resolve this message?

EF Message 6266:

CALCULATION NOT SUPPORTED: A CLGY (Clergy) screen indicates a non-taxable housing allowance, but a home office deduction was included on screen 8829. Generally, a minister's primary place of business is held to be the church and taking a deduction for expenses that were largely paid with non-taxable income is considered a duplication. Therefore, in light of a relevant IRS Audit Technique Guide and Tax Court case, Drake Software does not support this calculation.

In order to take a home office deduction for this return, you will have to manually compute the amount of the home office and enter it on screen C, Part V, as an "Other expense."

Drake Software will not compute a deduction for the business use of an office in home from a Form 8829 for a member of clergy. If a deduction for an office in home should be included on the tax return, delete (Ctrl+D) the 8829 screen in data entry, manually calculate the deduction for business use of home, and enter the result on the Income tab > C Self-Employed Income screen by double clicking in field 27a, "Other expenses." This information flows to Part V - Other Expenses of Schedule C.

Per the Minister Audit Technique Guide:

"The church often provides an office on the premises for the minister, so the necessity of an office in the home should be questioned closely. Furthermore, since the total cost to provide the home is used in computing the exempt housing allowance, home office deductions for taxes, insurance, mortgage interest, etc. would be duplications. (Note that itemized deductions are allowable for mortgage interest and taxes. IRC § 265(a)(6), and Rev. Rul. 87-32, 1987-1 C.B. 131)."

For more information on Clergy housing allowances and deductions, see Publication 517, or the Minister Audit Technique Guide: or Related Links below.

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