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Level 1
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Level 7

sounds the 1099 was issued in error and should have been a W-2. 

Ministers are individuals duly ordained, commissioned or licensed by a church. 'Church' is used generically and does not refer to any particular religion. Compensation paid to a minister or clergy member typically is reported to them on Form W-2 (if the minister is an employee of the church), or Form 1099-MISC (if the minister performed services such as weddings and baptisms). Most ministers are treated as dual-status taxpayers.  They are employees for income tax purposes but not for Social Security and Medicare tax.  Ministers are not subject to federal income tax withholding.  A minister and employer may agree to voluntary withholding to cover any income and SE tax.  All withheld tax is reported in box 2, Form W-2, as federal income tax withheld.  If boxes 3-6 on the Form W-2 are empty, the minister is required to complete a Schedule SE using the minister's worksheet to determine the taxable amount of their ministers income.  If the minister received a parsonage allowance, it will generally be reported in box 14.  The amount listed there is considered the fair market value of the parsonage and will also need to be entered on the Schedule SE minister's worksheet.

If the minister received a Form 1099-MISC, or has self-employment income from weddings, baptisms, etc., the income should be reported on Schedule C, Form 1040. If the minister has incurred out of pocket expenses related to this income, they should be reported as expenses on the Schedule C.
Schedule SE will need to be completed to calculate SE tax on the minister's Form W-2 wages, parsonage and utilities allowance.  The only exception to paying SE tax on these items when the minister or clergy member has filed either Form 4361 or Form 4029 which must be approved by the IRS.


Level 2

There is a line near the top of the Schedule C to enter minister housing and it will compute the SE Tax automatically.  I agree with previous post though that most pastors should receive a w-2 with housing shown in box 14.