@fct Jenn wrote:
I have a client who is ordained, performing ministerial duties as a pastor for a parachurch organization. He will receive a 1099NEC and they plan to designate a housing allowance. I have not run into this before with all the pastor taxes we do here. I wasn't even sure it was legal. I see the answer you gave about churches issuing 1099's but in this case it is a parachurch organization so I guess their board will vote on the housing allowance amount.
I want to emphasize I am not an attorney. I just have a decent amount of experience as a church treasurer and amateur tax person.
As I noted, it seems to me that anyone who is subject to a board that has authority to vote on an housing allowance, must therefore be a common law employee. However, your client would not be the first to have a housing allowance and be paid on a 1099 instead of a W-2. The organization may be avoiding unemployment tax and worker's comp premiums, depending on the state, or they may just be ignorant. The real question would be whether the pastor is harmed in any way by being treated as an independent contractor. The answer is much less clear cut than the case of other workers who might be denied state-required benefits and the employer half of the employment taxes. It would be up to the minister to complain to their state board of labor if they thought it was a problem.
