Hi, fellow Tax Pros,

Hope everyone is having a good tax season.

I Have a quick question about a client who is a Priest.

In addition to his small wages on his W-2, he receives a small stipend for any extra Masses, Funerals, or Weddings that he volunteers for. He used to receive a 1099-MISC recording those stipends. I would then report unreimbursed mileage, dues & subscriptions, and uniforms that he would pay for in the performance of his duties on schedule C of his Form 1040 which flows to his state and local tax returns.

The Diocese changed its stipend policy and is now giving all Priests a $300 payment per month ($3,600/year) which is now being reported on their W-2s; no Form 1099-MISC is issued.

Going forward, should I continue to report his expenses on Schedule C or on Form 2106 as unreimbursed employee expenses even though the expenses would not benefit him on his federal tax return but would benefit him on his state and local earned income tax returns here in Pennsylvania?

Thank you in advance!