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robyn2610
Level 2
October 15, 2020
Question

housing allowance and schedule c vs regular w2

  • October 15, 2020
  • 2 replies
  • 20 views

what is the benefit of a clergy receiving a housing allowance.  I have a client who changed over from a w2 to 1099 housing allowance.  when he was a w2 the church paid half the taxes.  what is the benefit to housing allowance where he has to pay medicare taxes  and social security taxes?

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2 replies

TaxGuyBill
October 15, 2020

A Housing Allowance is not subject to income tax.

 

But your statement of "client who changed over from a w2 to 1099 housing allowance" is concerning.  Was it JUST the Housing Allowance, or did all of his pay change?  Unless the facts change, the person or church does not just decide to change from an Employee (W-2) to an Independent Contractor (1099).

    qbteachmt
    qbteachmt
    Level 15
    October 15, 2020

    "to 1099 housing allowance"

    But housing allowance is not reported on the 1099. Do these people know what they are doing? Is this a case of worker misclassification?

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