March 17, 2017

Gifts Paid Out of Church Funds: Form 1099-MISC Requirements

Question:

 A church gave a wedding gift of $1000 to a couple who are church members. No goods or services were provided by the couple in exchange for the gift.  Is a Form 1099-MISC required? 

Answer:

In the following answer, we assume that the couple are not employees of the church from whom the gift could not be viewed as compensation for their services. Also, the amount seems to be small enough to avoid any concerns of "private inurement."

Accordingly, no Form 1099-MISC is required. According to the 2017 IRS Instructions for Form 1099-MISC a Form 1099-MISC is only required for payment of goods or services. The requirements are as follows:

"File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year: 
At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8);
 At least $600 in: 
1. Rents (box 1); 
2. Services performed by someone who is not your employee (including parts and materials), box 7; 3. Prizes and awards (see instructions for boxes 3 and 7); 
4. Other income payments (box 3); 
5. Medical and health care payments (box 6); 
6. Crop insurance proceeds (box 10); 
7. Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish (box 7); 
8. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3); 
9. Payments to an attorney. See Payments to attorneys, later; or 
10. Any fishing boat proceeds (box 5)."

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