Issued Minister Form 1099-Misc.

by Ekin
(Houston)

For this 2010 year, I will issue my Pastor Form 1099-Misc. In box 7 "Nonemployee Compensation" I believe I just need to put his base salary (For Income tax purpose, Housing Allowance is not subject to Income Tax).

However, for SECA purpose, Housing Allowance is subject to SECA tax. Which box on Form 1099 I need to put Housing Allowance? Is that box 3 "Other Income"??

Thank you for your help,

God Bless you and your family.

vickey's reply

Thank you, Ekin.

A housing allowance is not recorded anywhere on a 1099-Misc because housing allowances are for dual-status ministers who are “employees” of the church.

Read this article in The CPA Journal: Minister Housing Allowance Presents New Challenges to better understand the IRS section 107 that allows for housing allowances.

So housing allowances are usually recorded in box 14 of an employee’s W-2 or simply stated in a church issued letter. See this post for an example of such a letter.

Hope this helps,

Church Accounting Package

www.freechurchaccounting.com

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Comments for Issued Minister Form 1099-Misc.

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W-2 vs. 1099
by: Don Setser, CPA

An ordained minister has a "dual status" with the IRS; he is an employee of the church for Federal and state income tax purposes but he is "self employed" for Social Security purposes. He must pay Self Employment tax on his compensation and housing allowance.

Therefore, as an employee of the church, he should be receiving a W-2 at year end for his compensation and NOT a 1099-MISC.

Issued Minister Form 1099-Misc
by: John

My question would be: "Why is the pastor being issued a 1099?"
Unless he/she is providing services as an independent contractor (like an evangelist, for instance), he/she would normally be considered an employee of the church. As an employee, he/she would be issued a W2, not a 1099.

As a tax preparer, I see several 1099s each year, usually issued because the employer is trying to avoid paying withholding. The IRS frowns on this (in fact, it's illegal).

I would be careful about issuing the 1099, unless you are certain he/she is entitled to one.

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