Missionary Support

Our church has been receiving missionary support for a couple who were getting ready to go overseas.

They were going through the process of being accepted by a missions organization at the time and have subsequently been accepted by that organization.

However, they asked that the support collected be deposited to their personal bank account and a 1099MISC be sent to them at the end of the year.

There has been no accounting for how the funds were spent up to this point. Is the 1099MISC the correct reporting instrument? Should the elders require an accounting of the funds?

Also, if we do it by sending a 1099 with no accounting, is the money still tax deductible to the contributors? This is a project the church agreed to support before funds came in.

Answer

I believe that as long as your donors gave to your missions fund and made their checks out to the church their donations will be tax deductible.

As far as the church’s responsibility, I am not entirely sure how your church should handle this situation.

Hopefully, one of the wonderful CPAs that contribute to this site will give you further instructions, but if they don’t, I would definitely contact one and make sure your church does everything it needs to do to ensure your donor’s contributions are being handled properly.

Hope this helps,



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Comments for Missionary Support

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Richard Hammer article on missionary contributions
by: Joy

The article linked below seems to cover all the bases on this topic. Our church just decided to independently support a missionary for 6 months and the Elder Board wants a contract drawn up. It seems we need more detail in reporting to make the contributions tax deductible. Any thoughts?
http://ag.org/top/Church_Finance/ch_finance_contributrions.cfm
I would love more info on this
by: Jon

My wife and I have started a small ministry and we know missionaries all over the world.

On occasion I get the question "can we run our 'support' through your ministry so that our donors can get a tax deduction?"

In some cases, we would absolutely love to do that for them, but I am unclear how to go about it.

If that person is a part of an organization, we would just send the money to the organization, but that defeats the purpose.

We are more talking about people who are "independent" missionaries.

How do we document the relationship between the ministry and the missionary?

I am worried that the IRS might just say "hey, you can't just send people money, that is inurement."

Any more thoughts on all of this?
Deducting ministry expenses
by: Ariel

How do you deduct the ministry expenses on the personal income tax. Is it the schedule C?
Should be Okay
by: Anonymous

As a CPA and former missionary myself, I see no problem with the scenario described. The contributions are being given to the church to use as they see fit. Hence they are tax-deductible.

The church board properly accepted this couple as a missionary project. As long as the couple is in fact pursuing their missionary affiliation and then doing the actual work in the field, and they give a periodic update verifying this, I see no reason why the church can't do exactly what the couple has suggested: Deposit the money directly in to their bank account and issue a 1099 at year-end.

And when I say give a periodic update, I mean ordinary newsletters or reports. There is no need for a line-by-line accounting of every dollar or anything like that. They are using it for living expenses, airfares, ministry projects, etc. That's how you do missionary work and there's nothing wrong with the money being spent for any of these.

If the church gets too controlling, then they become employers of the couple and a W-2 and withholding taxes would become necessary. This is not desirable. But if the couple is independent or working for a mission agency, there is no employer-employee relationship and funds given by the church are basically a grant to do mission work.

If an accounting is deemed to be needed, ministry expenses would be those shown on the couple's income tax return. The rest are living expenses and subject to income and self-employment (social security) tax. As long as they are paying their taxes, I can't imagine that the IRS will have much of a problem.

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