October 04, 2016

Compensation as a "Volunteer"

Question:

An individual receives donations from various individuals through an organization that sponsors his  volunteer service abroad. He also receives a monthly "gift" from the organization for volunteering.

Do either of these income streams require the issuance of Form 1099-MISC? 

Answer: 

For the donations receive in connection with the volunteer work, the Form 1099-MISC does not need to be issued by the sponsoring organization if all of the funds are spent for expenses related to the volunteer work and documented accordingly to that organization. 

According Internal Revenue Service Publication 526, qualifying expenses must be those:
  • Directly connected with the services provided, and
  • Only incurred because of the services you gave.
Travel expenses of volunteers:
  • Travel expenses necessarily incurred while you are away from home performing services for a charitable organization only if there is no significant element of personal pleasure, recreation, or vacation in the travel,
  • Air, rail, and bus transportation, 
  • Out of ­pocket expenses for your car (although most volunteers simply use the charitable mileage rate of $.14 per mile (2016)), 
  • Taxi fares or other costs of transportation between the airport or station and your hotel,
  •  Lodging costs, and 
  • The cost of meals.
Qualifying expenses do not include:
  • The value of the service you provided
  • Personal, living, or family expenses.
If the monthly “gift” actually exceeds qualifying expenses, then it represents compensation for services performed. It should be reported either on an independent contractor's Form 1099-MISC if it exceeds $600 in the tax year or on an employee's Form W-2.

See past MinistryCPA post regarding charitable travel:

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