Skip to main content

Congregational Gifts to Missionaries

Question 1:

A church asks it members to consider making a contribution to its missionaries for a Christmas Gift. Contributions are designated to the church in general, i.e. "The Missionary Christmas Fund" (not to any individual missionary); the church leadership has full control over what amount it gives to each missionary. After all contributions are received, the church usually gives about $200 to each missionary, with checks issued to them personally. The individual contributors receive a tax deductible receipt. Is this correct? Does the church need to issue a Form 1099-MISC to each missionary, since the amounts are not over $600?

Answer 1:

Since the congregants donated directly to the church and not the individual missionary, their donated amounts are tax deductible. The amounts they donate should be reported to them at the end of the year in a statement listing their donations.

The $600 referred to in the question is an annual amount. If the church disburses more than $600 to the missionary throughout the year, than this amount should be reported to each missionary on a Form 1099-MISC. However, most churches find it best to process these contributions through each missionary's mission agency. In these cases no Form 1099-MISC is necessary since the agency is responsible for IRS reporting.

Question 2:

Is the individual missionary required to include the gift in his or her income?

Answer 2:

Yes, amounts received are considered compensation reportable by the individual as income. This is true whether or not the individual received a Form 1099-MISC.

Comments

Popular posts from this blog

Housing Allowance and Form 1099-MISC Reporting

Question:

A church provides its minister a housing allowance, but for other purposes it believes that it must report the full amount of compensation (including the non-taxable housing allowance portion) on Form 1099-MISC (in order to demonstrate the full earnings of the minister). If the church reports his compensation,including the housing allowance, on Form 1099-MISC as taxable income, will he be able to deduct his housing expenses somewhere else on the Form 1040?

Answer:

This questions brings up a couple of issues. First, most ministers are properly classified as employees who receive Form W-2, not as independent contractors who receive Form 1099-MISC. On Form W-2, Box 1 for taxable compensation is reduced reflecting the church's designation of a portion of his pay as non-taxable. Then in Box 14, it typically reports as a memorandum item his additional non-taxable, housing allowance compensation. In the situation addressed in the question, this Form W-2 reporting may or may not a…

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…

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 …