Skip to main content

Donations to Special Speakers and Honorariums to Non-Citizens

Question 1:

Can donations made by an individual to a special speaker hosted by the church be included in that individual's statement of donations?

Answer 1:

Since the church is acting corporately as the entity engaging the services of the guest speaker and compensating him accordingly, the donations will be tax deductible for the individual donors, and thus may be included in the individual donor’s giving statement. This is not considered a situation in which one individual is simply giving a personal gift to another--a non-deductible activity.

Question 2:

How should a church report a honorarium to a special speaker who does not have a Social Security number (a non-U.S. resident), since the church cannot give the special speaker a Form 1099-MISC?

Answer 2:

This is a very difficult issue for a local church to deal with. It is safe to say that compensating individuals who do not have a legal right to work in the U.S. must be avoided. 

Churches that host special speakers from foreign mission fields may be wise to defer to the mission agency sponsoring such guest speakers therefore, any support raised may best be distributed to the mission agency, instead of the speaker, for its handling.

If a foreign individual accompanies a U.S. missionary to a local church, it may be best to compensate the missionary instead of his or her guest. This assumes that the missionary is predominantly the one supported by the church to represent it on in a foreign country and that the guest is simply accompanying the missionary to better "tell the story."

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: 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

Debits and Credits for Designated Gifts

Question: A church is setting up QuickBooks for its accounting, but its personnel have little experience with fund accounting. What are the entries for the receipt and disbursement of designated gifts and the opening balances? Answer: We recommend that most churches that do not need to present financial statements in accordance with Generally Accepted Accounting Principles (GAAP) observe the following steps. Even those churches that do report using GAAP can employ these methods but must make some adjustments when preparing their financial statements. What we will demonstrate relates to what most churches call "designated gifts" (CPAs call these  Temporarily Restricted  gifts). These are gifts that donors contribute with the intention that the church will spend the funds as they direct. Most churches do not receive "endowment gifts" in which donors prohibit the expenditure of the core gift (CPAs call these  Permanently Restricted  gifts). Only earnings on the subsequ

Rental of a Church Parsonage to a Non-Minister

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