Skip to main content

Form 1099 for Payments to Other Ministries

By
Question:

 A church supports various ministries. If a check is written to a ministry (a tax-exempt organization), does a church issue a Form 1099-MISC to that ministry. The church leaders understand that it is to issue Form 1099’s when it compensates individuals in a ministry.

 The posted question concludes: "The only thing we can find is that in general we do not have to issue a Form 1099 to a corporation."

 Answer:

 One of the exceptions to required reporting of payments listed in the 2010 instructions for Form 1099-MISC is "payments to tax-exempt organizations." Therefore, payments to a ministry are not reportable.

 Churches that pay rent, services, etc. to individuals who are not employees (they receive Form W-2) must file Form 1099-MISC.

 Thanks to the Patient Protection and Affordable Care Act of 2010...
Regarding the last sentence in the above Question, beginning with payments in 2012, for-profit corporations that are paid by the church for rent, services, etc. must also receive Form 1099-MISC from it.

 The penalties for non-filing and for failure to withhold Backup Withholding, when required, are steep and will increase in 2012.
Labels:

Comments

  1. UnknownFebruary 18, 2011 at 7:29 AM

    For the new law to issue 1099s to corporations, is that just for services rendered and rent or would it also include stores we purchased products from? i.e. every week we purchase office supplies and are invoiced for it

    ReplyDelete
  2. Corey PfaffeFebruary 21, 2011 at 10:19 PM

    In early February, Congress rescinded the complex and burdensome Form 1099 rules that many were dreading.

    ReplyDelete
  3. AnonymousJanuary 15, 2014 at 10:33 PM

    Our church rents space from a non-profit organization and the organization happens to be a tax exempt corporation. Do we need to issue them a 1099 for rent more than $600?

    ReplyDelete

Post a Comment

Popular posts from this blog

Church Car Purchase for Pastor

By
Question: A church would like to purchase a car for the pastor's use. What is the best method to accomplish this goal? Should the car be titled in the pastor's name? What will be the tax consequences of this arrangement? Answer: The church has two main alternatives for this purchase:  Title the car in the pastor's name and reimburse him for business expenses Title it in the church's name and treat personal use as taxable compensation There are fewer immediate tax consequences for the latter. Since both are viable options, we will discuss both situations in this post. If the church chooses to give the car to the pastor and register it in his name, he is free to use it for whatever personal use he desires with no tax consequences. However, the fair value of the car is taxable as compensation at the time it is given to the pastor. Internal Revenue Code section 102(c) clearly states that gifts given to employees by their employers are taxable compensation. The...
2 comments
Read more

Can Form 4361 be filed after the deadline?

By
Question:   Is it possible to opt out of Social Security after the 2-year deadline? Answer:  Unlike other employees, a licensed or ordained minister has the option to opt out of Social Security and Medicare (FICA). If a minister wants to opt out they must file Form 4361 by the tax deadline including extension, in the second year in which they have received ministerial income of $400 or more. This election is final, and the minister cannot opt back into FICA taxes.  At MinistryCPA, we have received questions from ministers who have exceeded the two year deadline and desire to opt-out. There have been several court cases which provide guidance in answering this question. Some have argued that the minister was unaware of the deadline, had mistakenly believed they had filed a timely election, were given incorrect advice by an IRS employee, or their opposition to participate in Social Security and Medicare did not arise until after the 2-year deadline had passed. In each of th...
Post a Comment
Read more

Rental of a Church Parsonage to a Non-Minister

By
Question: A church owns a parsonage, but the pastor does not use it as he owns his own home. The church rents the parsonage to a tenant other than a minister or employee of the church. Will the church be responsible for paying income tax on these monies as Unrelated Business Income (filing a Form 990-T) even if the money is used to carry on the business of the church? Answer: Whether the money is used for church purposes is irrelevant.  IRS Publication 598  states: "If an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business." Fortunately, in the case of rental income from real property, such income is "excluded in computing unrelated business taxable income" (Publication 598). Caution: see content below regarding debt-financed property.  However, a second concern not a...
Post a Comment
Read more