Skip to main content

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:

Comments

Popular posts from this blog

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…

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…

Heath Care Sharing Ministries and the SE Insurance Deduction

Question:

Can payments made to a health care sharing ministry (e.g., Samaritan Ministries, Christian Healthcare Ministries) which are exempt from the Affordable Care Act be deducted from income as a self-employed (SE) insurance deduction?

Answer:

First, to be technical, "health care sharing ministries" (IRS exemption D) provide participants an exception from Shared Responsibility Payments (ACA penalties), but don't connote other tax benefits.

Second, a health care share ministry does not qualify as health insurance. One does not pay what the IRS considers to be premiums, but instead shares the health expenses of others. And according to IRS Pub 535, in order for self-employed individuals to qualify for a SE insurance deductions they must be to pay premiums for qualifying health insurance.