Which option should I choose? I'm helping a friend do taxes. It shows wages of $6,000 in the W2 and a housing allowance of $1,500 that was just used on mortgage and utilities. She didn't get extra money for the housing allowance. It was assumed that of the $6,000 she earned, she would pay her own housing expenses. I don't know if she should pick option #1 or #4.
1. Pay self-employment tax on wages only
2. Social Security and Medicare taxes have been withheld
3. Pay self-employment tax on housing allowance only
4. Pay self-employment tax on wages and housing allowance
Option 5 doesn't apply to me.
