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.