November 01, 2016

Church Remodeling Payments Reported on Form 1099-MISC

Question:

A church remodeled one of its buildings. One of the members coordinated the remodel, and the church paid individuals directly for their labor. According to the Internal Revenue Service's Form 1099-MISC instructions, one of the criteria is: "You made the payment for services in the course of your trade or business."  Since construction and remodeling is not the church's trade or business are the payments to these individuals reportable on Form 1099-MISC?

Answer: 

Yes the payments are reportable on Form 1099-MISC. According to Form 1099-MISC instructions entitled "What is nonemployee compensation?
If the following four conditions are met, you must generally report a payment as nonemployee compensation.
  • You made the payment to someone who is not your employee. 
  • You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations). 
  • You made the payment to an individual, partnership, estate, or, in some cases, a corporation. 
  • You made payments to the payee of at least $600 during the year."
In response to the specific question posed by the one requesting assistance here, the statement in the Form 1099-MISC instructions, "You made the payment for services in the course of your trade or business” is referring to a previous statement in the instructions: “[Nonemployee Compensation] includes fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee.” While remodeling is not the trade or business of the church, the church is included among those organization subject to Form 1099-MISC filing.

See another MinistryCPA post discussing Employee vs. Independent Contractor


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