Question:
In the case of giving cash donations to a missionary who has applied for and received an Internal Revenue Code 501(c)(3) determination letter as a tax-exempt organization, what is the amount that can be given before it becomes a Form 1099-MISC issue? What about those who do not have a 501(c)(3) organization but are members of a known missionary organization?
Answer:
Payments to non-employee individuals for services rendered in excess of $600 per year are reportable on Form 1099-MISC (see instructions for the Form at www.irs.gov). Since a 501(c)(3) tax-exempt organization is not a "non-employee individual," no Form 1099-MISC requirement applies. The payments are considered to be made by one tax-exempt organization to another.
If the church wishes to receive confirmation of a missionary's statement about the organization, it can request a copy of its determination letter (a common practice for many 501(c)(3) charities). Perhaps just as effective is to simple send the missionary IRS Form W-9 -- Request for Taxpayer Identification Number and Certification. If the missionary is not an individual, but, rather, employed by a 501(c)(3) organization, he or she can check a box labeled "exempt payee."
If the missionary is not associated with a missions board or other tax-exempt charity, then Form W-9 will facilitate collection of the necessary information to issue Form 1099-MISC. Missionaries affiliated with a missions board are considered employees of their agencies and receive Form W-2 from them.
In the case of giving cash donations to a missionary who has applied for and received an Internal Revenue Code 501(c)(3) determination letter as a tax-exempt organization, what is the amount that can be given before it becomes a Form 1099-MISC issue? What about those who do not have a 501(c)(3) organization but are members of a known missionary organization?
Answer:
Payments to non-employee individuals for services rendered in excess of $600 per year are reportable on Form 1099-MISC (see instructions for the Form at www.irs.gov). Since a 501(c)(3) tax-exempt organization is not a "non-employee individual," no Form 1099-MISC requirement applies. The payments are considered to be made by one tax-exempt organization to another.
If the church wishes to receive confirmation of a missionary's statement about the organization, it can request a copy of its determination letter (a common practice for many 501(c)(3) charities). Perhaps just as effective is to simple send the missionary IRS Form W-9 -- Request for Taxpayer Identification Number and Certification. If the missionary is not an individual, but, rather, employed by a 501(c)(3) organization, he or she can check a box labeled "exempt payee."
If the missionary is not associated with a missions board or other tax-exempt charity, then Form W-9 will facilitate collection of the necessary information to issue Form 1099-MISC. Missionaries affiliated with a missions board are considered employees of their agencies and receive Form W-2 from them.
Dear Mr. Pfaffe,
ReplyDeleteI cannot thank you enough for creating this blog. The information contained in these posts has been so helpful to me as a financial secretary who is very good with numbers but has had very little formal training on how to properly handle our church finances. I learn more each year that I continue in this position, but still had a lot of questions. Many of my questions were answered today by reading your blog. Thank you!