Q&A: Do 1099 Forms Need to Be Issued to People Receiving Charitable Funds?

The benevolence distributions to a particular individual must represent a legitimate charitable distribution.

My church’s benevolence committee has assisted a family for several years who has suffered great loss and financial hardship. Some new members recently joined the committee and say 1099 forms should have been issued for each year the family received financial assistance. Are they correct?
Does the church need to give the recipient of benevolence distributions a Form 1099-NEC (if the distributions are $600 or more in any one year)? Ordinarily the answer would be no, since the Form 1099-NEC is issued only to nonemployees who receive compensation of $600 or more from the church during the year. IRS Letter Rulings 9314014, 200113031.
To the extent that benevolence distributions to a particular individual represent a legitimate charitable distribution by the church (consistent with its exempt purposes), no Form 1099-NEC would be required. It would be unrealistic to characterize such distributions as compensation for services rendered when the individual performed no services whatsoever for the church.
Adapted from the Church & Clergy Tax Guide.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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