Missionary Support from Church Acting as a Mission Agency

Question:

A missionary is receiving partial support from donors who contribute to her home church on her behalf. How should this income be reported by the church and by the missionary?

Answer:

Because the church is not using a mission agency, rather, amounts are sent directly to the missionary, the church is considered the payer of the compensation.

A November 14, 2010, blog post explains the requirements for a church that chooses to act as a mission agency:

Church as Mission Agency

While a church can act as the mission agency, mission agencies can often provide for missionaries better than a church could. Since most mission agencies treat missionaries as their employees, they can establish retirement plans, health plans, and provide many other benefits for the missionaries that a church is unable to provide.

In the absence of a mission agency, the church is responsible to file an information return (either a Form 1099-MISC or Form W-2). The missionary is subject to income and self-employment tax on her earnings.

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MinistryCPA - Corey A. Pfaffe, CPA, LLC

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