Skip to main content

Form 1099-MISC for Benevolent Gifts?

Question:

Does a church need to issue a Form 1099-MISC for the rent and medical bill payments it disbursed from its benevolence fund? A church may issue checks directly to the landlords and medical facilities of the individuals in its community who seek help during these difficult financial times. This gives it assurance that the money is being used for rent, medical bills, food, utilities, etc. as intended.

Answer:

The instructions to Form 1099-MISC require non-profit organizations to report "only when payments are made in the course of your trade or business." These payments are not made in exchange for either 1) services provided by the recipient of benevolent gifts, or 2) services provided to the non-profit organization (the church). While I discovered no direct advice from the IRS on this subject, it seems reasonable that no Form 1099-MISC requirement applies. The benevolent payments are not "in the course of your trade or business." Further, had the individuals receiving the assistance been given the gifts and, then, made subsequent payments, no Form 1099-MISC requirement would have fallen upon them either.

Comments

  1. Thank you so much! Just was looking for an explanation and found your post!

    ReplyDelete
  2. Thank you for this answer. Do you by any chance a code section or an official ruling where this stems from? We have people in our church who question this and I even heard some say that the amount given to those in need should be reported on 1099-C. I undertand it's not right, but it would be nice to be able to set the record straight with the official word.

    ReplyDelete
  3. According to IRS Pub. 525, "In most cases, you must include in gross income everything you receive in payment for personal services." Since a recipient of benevolence provides no services, these gifts do not meet the definition of taxable income provided by the IRS.

    ReplyDelete
    Replies
    1. During the COVID-19 pandemic, we used benevolent fund to supports a few families of our church congregation and employees around $500 to $2k differently. Should we issue 1099-misc and/or add the amount in W-2 gross income? Thanks!

      Delete
    2. If the payments were truly benevolent, a 1099-NEC does not need to be issued. One of our more recent blog posts includes a more in depth discussion of church benevolence. http://ministrycpa.blogspot.com/2020/03/stewarding-your-church-benevolence-fund.html

      Delete
  4. A question: What if we had a someone preach twice during the span of the year. For those two times in the pulpit he received a total of $1000 in honorarium ($500 per Sunday). We then gave him a 1099 for that amount. However, during the course of that year, he and his wife also lost their jobs and encountered verified, substantial hardship. If we chose to give them assistance from our benevolence fund, would that be permissible? Would it be taxable income for him or simply treated as a benevolence gift?

    ReplyDelete
    Replies
    1. Michael, thank you for your question. The short answer is yes, it is permissible and may be considered tax free depending on the circumstances. For a full discussion see the following blog post.
      http://ministrycpa.blogspot.com/2020/08/may-benevolent-non-taxable-gift-be.html

      Delete

Post a Comment

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: Payments from one 501(c)(3) organization to another 501(c)(3) organization are not subject to Form 1099-MISC reporting. The IRS 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 missionaries

Special Topic: U.S. Olympic Champion Ben Peterson's Autobiography "Road to Gold"

Road to Gold , by Ben Peterson We are privileged to serve our client Ben Peterson and Camp of Champs, the wrestling ministry he founded   and directs. Ben wrestled for more than 16 years, coached on a collegiate level for 28  years, and has directed Camp of Champs for more than 40 years. We have read his autobiography and found Ben's dedication to the sport and his faith to be inspiring. If you are looking for a good story we highly recommend Ben's  Road to Gold. In Road to Gold , Ben shares the lessons he learned throughout his upbringing and how they led him to achieve Olympic victory. Ben states a key element of his youth was the consistency of his parents. He was encouraged to read the Bible every day from an early age, which he now describes as the most stabilizing habit in his life. Throughout his story Ben also emphasizes the importance of confidence, solid goals, hard work, and consistency. These qualities helped Ben throughout his life and wrestling career, from learni

When you don't know what you don't know

Here at MinistryCPA, we recognize that many churches rely on volunteers and/or part-time treasurers and financial secretaries.  With this in mind, we seek to come alongside ministries in providing the much-needed support to ensure that they are operating in a manner that is both compliant with governing authorities and taking advantage of opportunities for improved stewardship of ministry and employer financial resources.  Please consider this brief checklist to determine if your ministry needs to look further into areas that could be classified as “We don’t know if we are compliant.” Please check all compliance requirements that are currently being met: File quarterly Form 941 or annual Form 944 with the IRS Issue Forms W-2 to all employees and File Forms W-2/ W-3 with SSA Ministerial Housing Allowance is only listed in box 14 of the Form W-2 – it is not included in box 1 Obtain Form W-9 from all individuals/businesses that are paid the cumulative total of $600 or more in the year f