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More Missionary Form 1099-MISC Questions and Answers

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Question:

 A church provides financial support to a retired couple who works in a ministry that the church also supports through its Missionary Fund. The amount exceeds $600. Should it provide them with a Form 1099-MISC?

 Answer:

 If a church sends the checks directly to them, not the ministry, then it needs to issue Form 1099-MISC since these disbursements relate to services they provided which were being compensated by the church's support.

 Question:

 A church sent support to a missionary through a Mission Board, but then made some direct payments to him for love offerings given so he could take a missions trip. The treasurer provided a Form 1099-MISC for the amount paid directly to him as a result of the love offering. Was the treasurer correct in filing Form 1099-MISC?

 Answer:

 It is very difficult to separate compensation for missionaries whose livelihood is from the ministry from disbursements not related to their "employment." This is why all gifts to employees or independent contractors (missionaries in the case citing here) are considered taxable compensation. Unlike the situation when a volunteer raises support for travel expenses to go to a foreign field, missionaries are considered to be engaged in for-profit business activity. Accordingly, I believe it is correct to issue the Form 1099-MISC for the love offering directed to the missionary's travel ("missions trip") fund. To the extent he can document his deductible business travel expenses he will avoid income and SE tax on the earnings.
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  1. Steve OdemSeptember 28, 2009 at 2:07 PM

    I agree, and would add that if the missionary is a minister, that opens up an entire range of deductions for housing and related costs. Further, depending on other factors, much if not all the income may be excluded from income tax (but NOT self-employment tax).

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