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Form 1099-MISC Rental Payment Reminders

Question:

During the course of 2013, a church made rental payments in excess of $600 to its landlord. Is the church required to report these payments to the IRS? If so, what form should be used?

Answer:

Form 1099-MISC is used for reporting rental payments to the IRS. According to the instructions, you must "File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year...at least $600 in rents." Other criteria also apply; for example, "Report on Form 1099-MISC only when payments are made in the course of your trade or business. Personal payments are not reportable...However, nonprofit organizations are considered to be engaged in a trade or business and are subject to these reporting requirements.

There are exceptions to this requirement, including payments made to a corporation. A full list is available on the IRS website within the 1099-MISC instructions. To assist in the compliance with these requirements, Form W-9 should be requested from payees. For more posts on this topic, please type "1099-MISC" in the blog's search window.

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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. 

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