Skip to main content

Form 1099-MISC for Missions Trips

Questions:

Should a church issue a Form 1099-MISC in the following situations?

1. Church member takes a short term mission trip. Money is raised by asking for donations to the church. The church writes checks to the person for more than $600. No accounting of expenses is required of the member.
2. Same as above, but church reimburses expenses for the trip based on an accounting provided to the church (essentially an expense report).
3. Are the answers different if the trip is not actually sponsored by the church but done by a church member through another organization?

Answers:

Assumptions:
  • The church member is serving as a volunteer and not an employee of the church.
  • The trip is for ministry purposes, not a disguised personal vacation.
If the church member had paid his or her own travel expenses, they would have been deductible as an out-of-pocket charitable contribution. Any reimbursements received simply reduce the amount of charitable deduction.

Form 1099-MISC is issued for amounts that payees receive as Miscellaneous Income. Since the disbursements were not in exchange for services rendered, they are not reportable on Form 1099-MISC.

Ministries expect volunteers to return any excess funds provided to them that are not needed to provide religious services. When an employee (not a volunteer) represents a ministry on a ministry trip, any excess disbursement to him or her will be considered taxable income. If no documentation is received from the employee, the entire amount should be treated as a non-accountable plan fully reportable on his or her annual Form W-2. The employee can then deduct the allowable expenses on Form 2106 as employee business expenses.

The sponsor (church or otherwise) should not effect the above answers.

Comments

  1. I'd like to ask a related question:

    Suppose an individual went with a group of people (not an organization) to Haiti after the earthquake to build a school and church, and they received donations from people (non-church members) that were funneled through their church so that the donors could receive a tax deduction. One check that was funneled through was for $1000, the others $500 or less, all from different people.

    Would the recipient of these donations (which were used exclusively for a plane ticket and other trip-related expenses) receive a 1099 for the money they received for their mission trip?

    ReplyDelete
  2. The situation you describe seems to fit quite well with the hypothetical example in the original blog entry -- no Form 1099-MISC should be issued.

    ReplyDelete
  3. Thank you for this information! Suppose it is a trip to the Holy Land, and the travel agency gives a free trip for every so many people who purchase a ticket. Can that free trip go to the volunteer organizer without a 1099 being issued if the travel agency donates the trip to the church? What about a pastor/spouse - would it then be taxable income?

    ReplyDelete
  4. The nature of the trip is an important consideration in this scenario, as only trips for charitable and employment related purposes are eligible for tax preferential treatment. IRS Publication 526 lists the requirements for a charitable deduction for travel expenses:

    "Generally, you can claim a charitable contribution deduction for travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel…The deduction for travel expenses will not be denied simply because you enjoy providing services to the charitable organization ...”

    If these requirements are met, the trip will not be taxable income to the volunteer, but, of course, the volunteer cannot take a charitable deduction for travel expenses he did not incur.

    In the case of the pastor who is an employee participating on behalf of the church, employment law applies (we presume). For his spouse, see the following blog post:

    http://ministrycpa.blogspot.com/2011/09/expenses-for-wife-attending-conference.html

    ReplyDelete

Post a Comment

Popular posts from this blog

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 …

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…

Qualified Small Employer HRAs

On December 13, 2016, President Obama signed the 21st Century Cures Act, allowing qualified small employers to offer Health Reimbursement Arrangements (HRA) that follow certain terms.

After the Affordable Care Act was passed, the IRS originally determined that an HRA was not a qualified group health plan. The Cures Act overrules this decision. HRAs are again an option for qualifying small employers.

To be eligible, the small employer must have fewer than 50 employees and must not offer a group health plan to any of its employees.

The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) must be subject to the following terms.
No salary reduction contributions may be made (i.e., 100% employer-funded).Employer must receive proof of employee’s minimum essential coverage.Reimbursements must be for qualifying medical expenses.Reimbursements for any year cannot exceed $4,950 (or $10,000 for family coverage), which will be adjusted annually for inflation.Employer must offer the …