February 27, 2011

Taxable Support of Foreign Missionary or Benevolence?

Question:

A missionary is partially self-supporting and partially supported by donors. A church is considering giving him funds to help subsidize his daughter’s overseas schooling. Will this amount be reportable on Form 1099-MISC as taxable income or could it be considered a benevolence gift for which a Form 1099 would not be required? Would there be a difference if the church made checks out to him vs. making them out to his minor daughter who is receiving the schooling?

Answer:

The missionary is receiving the support targeted for his daughter's education due to his ministerial status. If the child been a needy individual within the church's congregation for which no services were rendered, then there would be no tax consequences. However, it appears that the support is in consideration of the missionary's overseas work. If the payments are directly to the missionary and not through his mission agency, then Form 1099-MISC should be issued. Making the payments directly to his daughter's school will not negate this requirement.

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