If I receive a Form 1099-MISC and box 7 has $50,516.00 entered, but $25,000 of it is for parsonage, what form do I fill out?

ANSWER

The BIDaWIZ Team's Answer:

The minister will need to report the full Form 1099-MISC income on Schedule C where it will be fully taxable. The minister could then claim the housing allowance (parsonage) as a deduction on Line 21 of Form 1040. This would be reported as a negative amount in the other income line 21 for the amount of the parsonage. Also, the minister should attach an explanation of the negative amount. In addition, the full amount of compensation (including the non-taxable housing allowance) is subject to self-employment tax on Schedule SE unless the minister has successfully applied for exempt status using Form 4361.