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housing allowance and schedule c vs regular w2

Level 1

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 Comments 2
Level 15

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).

Level 15

"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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