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Form 1099-MISC for Benevolent Gifts?

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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.
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Comments

  1. AnonymousJanuary 14, 2011 at 11:48 AM

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

    ReplyDelete
  2. UnknownJuly 25, 2013 at 4:00 PM

    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. Corey PfaffeJuly 30, 2013 at 12:41 PM

    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
    Replies
    1. Jerry WangJanuary 19, 2021 at 8:02 PM

      During the COVID-19 pandemic, we used benevolent fund to supports a few families of our church congregation and employees around $500 to $2k differently. Should we issue 1099-misc and/or add the amount in W-2 gross income? Thanks!

      Delete
    2. Brayden ShortJanuary 28, 2021 at 11:58 AM

      If the payments were truly benevolent, a 1099-NEC does not need to be issued. One of our more recent blog posts includes a more in depth discussion of church benevolence. http://ministrycpa.blogspot.com/2020/03/stewarding-your-church-benevolence-fund.html

      Delete
  4. MichaelApril 14, 2020 at 9:43 PM

    A question: What if we had a someone preach twice during the span of the year. For those two times in the pulpit he received a total of $1000 in honorarium ($500 per Sunday). We then gave him a 1099 for that amount. However, during the course of that year, he and his wife also lost their jobs and encountered verified, substantial hardship. If we chose to give them assistance from our benevolence fund, would that be permissible? Would it be taxable income for him or simply treated as a benevolence gift?

    ReplyDelete
    Replies
    1. Brayden ShortAugust 31, 2020 at 2:11 PM

      Michael, thank you for your question. The short answer is yes, it is permissible and may be considered tax free depending on the circumstances. For a full discussion see the following blog post.
      http://ministrycpa.blogspot.com/2020/08/may-benevolent-non-taxable-gift-be.html

      Delete

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