W2 Clergy can also receive 1099 payments BUT these payments are defined as income from funerals, weddings etc. Therefore I wonder if the Church or Diocese that employs them can pay them on both a W2 and cash reported on a 1099? Diocese in question allows W2 priests to substitute at other parishes and in return the priests receive a stipend from the church where they filled in. Undetectable from the priest's end as they are allowed to file a schedule C for these payments. It seems that the diocese though is crossing a line with regard to the issue especially considering the IRS focus on independent contractor issues.