Skip to main content

Form 1099-MISC for Benevolent Gifts?

Question:

Does a church need to issue a Form 1099-MISC for the rent and medical bill payments it disbursed from its benevolence fund? A church may issue checks directly to the landlords and medical facilities of the individuals in its community who seek help during these difficult financial times. This gives it assurance that the money is being used for rent, medical bills, food, utilities, etc. as intended.

Answer:

The instructions to Form 1099-MISC require non-profit organizations to report "only when payments are made in the course of your trade or business." These payments are not made in exchange for either 1) services provided by the recipient of benevolent gifts, or 2) services provided to the non-profit organization (the church). While I discovered no direct advice from the IRS on this subject, it seems reasonable that no Form 1099-MISC requirement applies. The benevolent payments are not "in the course of your trade or business." Further, had the individuals receiving the assistance been given the gifts and, then, made subsequent payments, no Form 1099-MISC requirement would have fallen upon them either.

Comments

  1. Thank you so much! Just was looking for an explanation and found your post!

    ReplyDelete
  2. Thank you for this answer. Do you by any chance a code section or an official ruling where this stems from? We have people in our church who question this and I even heard some say that the amount given to those in need should be reported on 1099-C. I undertand it's not right, but it would be nice to be able to set the record straight with the official word.

    ReplyDelete
  3. According to IRS Pub. 525, "In most cases, you must include in gross income everything you receive in payment for personal services." Since a recipient of benevolence provides no services, these gifts do not meet the definition of taxable income provided by the IRS.

    ReplyDelete

Post a Comment

Popular posts from this blog

Housing Allowance and Form 1099-MISC Reporting

Question:

A church provides its minister a housing allowance, but for other purposes it believes that it must report the full amount of compensation (including the non-taxable housing allowance portion) on Form 1099-MISC (in order to demonstrate the full earnings of the minister). If the church reports his compensation,including the housing allowance, on Form 1099-MISC as taxable income, will he be able to deduct his housing expenses somewhere else on the Form 1040?

Answer:

This questions brings up a couple of issues. First, most ministers are properly classified as employees who receive Form W-2, not as independent contractors who receive Form 1099-MISC. On Form W-2, Box 1 for taxable compensation is reduced reflecting the church's designation of a portion of his pay as non-taxable. Then in Box 14, it typically reports as a memorandum item his additional non-taxable, housing allowance compensation. In the situation addressed in the question, this Form W-2 reporting may or may not a…

Review: Form 1099 Payments to 501(c)(3) Organizations

Question:

A church rented space from another church last year. Should it request a completed Form W-9 and issue Form 1099-MISC?

Answer:

We have written similar blog posts on this topic in the past (listed below), but we figured it was a good time for a review. 

Payments from one 501(c)(3) organization to another 501(c)(3) organization are not subject to Form 1099-MISC reporting. The 2015 Instructions for Form 1099-MISC state that "payments to a tax-exempt organization" are exempt from reporting a Form 1099-MISC. 

The following are typical examples of payments of $600 or more by a church which are subject to reporting a Form 1099-MISC:
Rent paid to an individual (non-corporation)Payments for services rendered by individuals who are not employees (e.g. janitorial service, facilities, snow removal, guest speakers)Support sent directly to missionariesHere are some similar blog posts that we have written in the past:

Form 1099 for Payments to Other Ministries
Form 1099 for Non-profit?
Fo…

Gifts Paid Out of Church Funds: Form 1099-MISC Requirements

Question:
 A church gave a wedding gift of $1000 to a couple who are church members. No goods or services were provided by the couple in exchange for the gift.  Is a Form 1099-MISC required? 
Answer: In the following answer, we assume that the couple are not employees of the church from whom the gift could not be viewed as compensation for their services. Also, the amount seems to be small enough to avoid any concerns of "private inurement."

Accordingly, no Form 1099-MISC is required. According to the 2017 IRS Instructions for Form 1099-MISC a Form 1099-MISC is only required for payment of goods or services. The requirements are as follows:
"File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:  At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8);  At least $600 in:  1. Rents (box 1);  2. Services performed by someone who is not your …