December 05, 2012

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.

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