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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


Comments

  1. Thank you for your blog post.

    So if "payments to a tax-exempt organization are exempt from reporting a Form 1099-MISC", are there no circumstances in which a church should receive a 1099?

    I ask this question because our church is looking to cash out a $25,000 annuity that was purchased many years ago under the previous pastor. We have been told by the annuity company that they will issue a 1099 to the church for the amount of interest the annuity has gained over the years. Is this an error on the part of the annuity company? It is my understanding that a church is not required by the IRS to file a tax return every year. But if we receive a 1099 for interest earned on an annuity, will that mean that we have to file a tax return for that year?

    ReplyDelete
    Replies
    1. Great question! Most annuity companies will issue a 1099 as part of their regular process no matter the filing status of the receiver. Receiving a 1099 does not change the filing requirements of the church, if you are otherwise exempt from filing that will still be the case. That being said we do recommend keeping the form 1099-INT for your churches records.

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