February 02, 2016

Form 1099-MISC for My Pastor? Bad Idea!

Question:

Sue—“I’m planning on issuing my pastor a 1099-MISC for this year and I understand that I can't include Housing Allowance, but what about the retirement that church paid monthly on behalf of my pastor? And the mileage reimbursement we've paid him? Do I have to report all these on 1099?”

Answer:

Sorry, but it’s a bad idea all around. Unless your pastor is an itinerant pastor serving multiple congregations, it’s virtually impossible to classify him as an independent contractor for whom a Form 1099-MISC is prepared. Further, if the church provided him a retirement plan, then that settles it right there. There is no church retirement plan in the Internal Revenue Code for independent contractors. Pastors receive Form W-2. Housing Allowances are noted in the memo box – Box 14. And the retirement plan reporting depends on the type of plan. Mileage reimbursement? it depends on whether it’s an accountable or a non-accountable plan. Sorry to say this, but Sue likely needs professional help.