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CompTIA PDI+ Exam Prep

Category - Enrolled Agent

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Randy Lee is an ordained minister of a tax-exempt church. Randy receives a salary plus a housing allowance for rent and utilities. Which of the following statements is correct?
  1. Randy must claim as income on his return all of his salary and all of his housing allowance. The salary is subject to income tax and selfemployment tax but his housing allowance is subject to income tax only
  2. Randy does not have to report any income received from the church because the church is tax exempt
  3. Randy has to pay both income tax and selfemployment tax on his salary, but only selfemployment tax for the housing allowance. The housing allowance is not subject to income tax
  4. Randy only has to pay the self-employment tax on both his salary and the housing allowance. Neither is subject to income tax
Explanation
Answer: C - Randy has to pay both income tax and selfemployment tax on his salary, but only selfemployment tax for the housing allowance. The housing allowance is not subject to income tax.
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