When is a Church Required to Use Form W-9 and file 1099

When to Use W-9 and File 1099

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We understand that pastors and church staffs are issued W2s, but many churches fail to properly file 1099’s. Churches, other nonprofits, and businesses are required to issue a W-9 to contractors, unincorporated landlords, and to guest ministers, guest speakers, guest singers, guest musicians for any (honorariums) they will pay $600 or more during a calendar year.

The person is to complete the form and give it to church staff who then uses it to properly complete the 1099 that is later mailed to the payee for tax reporting.

To help ensure you have accurate information in time to file 1099’s, it is a good practice to have your guest complete the W-9 form before services are rendered in time for you to proof it for omissions and errors. This is critical with the implementation of “The Small Business Jobs and Credit Act of 2010” that increases fees for errors, omissions, and filing late.

Remember Pastors are to receive a W-2, not a 1099. This is not referencing when a pastor has a ministry engagement at another church and is treated as a contractor and receives a 1099. This is referring to when a pastor works for a church in the position of a pastor.

Things to Know:

  • While the payee is required to complete Form W-9, he or she is not legally required to sign the form W-9 unless he/she has been notified that he/she previously gave an incorrect TIN.
  • It is your church’s legal obligation to have the W-9 completed. If the person refuses to complete W-9, you are legally required under IRS guidelines to withhold 28% from the check to send to IRS. Your responsibility is to the church and to ensure that you do not put it at risk because of fear or awkwardness. This means if the check is $2,500 you are to deduct 28% of it and send to the IRS.
  • If your church fails to obtain a completed W-9 and then does not withhold backup withholdings, it subjects your church to being assessed tax at the 28% backup withholding rate, as well as interest and penalties for lack of compliance.
  • The name on the W-9 MUST match the name on the check. Some churches fail to ensure that the name on the check is the same as the name on the W-9. This is not just referring to misspelling a name, but putting a completely different name on the check. For example, your church may have booked an gospel singer name John Doe and make the check payable to John Doe. However, the W-9 that John Doe submitted is for Doe Enterprises, Inc. That means the check was written to the wrong party, which means the name on the check does not match and the SS# does not match, as the corporation has a FEIN not SS#. Usually the name you wrote the check to is the name you put on the 1099. In this case your church will be fined if this is not corrected within the 30-day period of filing the 1099. Also, in this instance, no 1099 should had been filed, because the check should have been made payable to a corporation, not an indvidual.

What to do with the Form W-9:

  No later than January 31

  • Issue 1099-MISC Form (“statement for recipient of miscellaneous income”) to any self-employed person to whom the church paid non-employee compensation of $600 or more within the year. There are some exceptions to who receives this.  (Corporations do not receive 1099.) In other words if you make a payment to Jaxton Taklor Ministries, Inc. and the check is made payable to the ministry and not the individual, you do not need to issue a 1099). For example, when you have a contractor or guest minister (singer/band, etc) and you know you will be paying an honorarium of $600.00 or more for the year, you must have the minister to complete a form W-9 prior to paying him. Some churches have all visiting ministers to complete a form 1099 regardless of the amount of the honorarium, as they may have the minister to return later within the year. A good church management software, such as PowerChurch or ACS tracks the amounts for you and if the amount reaches $600 by the end of the year a 1099 will be printed for it.

Below you can see the Form W-9 and its instructions.

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New Laws Affecting Churches:

The Small Business Jobs and Credit Act of 2010″ increased penalties for failure to file information returns, failure to furnish correct payee statements, and for intentional disregard of the law.  (see our article on this).

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The information contained in this blog is general in nature and is not intended to provide, or be a substitute for, legal analysis, legal advice, or consultation with appropriate legal counsel. You should not act or rely on information contained in this training without seeking appropriate professional advice.

 IRS Circular 230 Notice: United States Department of the Treasury Regulations require us to inform you that to the extent this training and any resources mentioned hereto concerns tax matters, it is not intended nor disseminated to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by United States Internal Revenue Code.

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8 Responses to When is a Church Required to Use Form W-9 and file 1099

  1. Jenell Brown says:

    If a church pays more than $600.00 to an attendee for help with rent, utilities, etc. is the church required to give that person a 1099?

    • In response to your inquiry regarding a church paying “more than $600 to an attendee for help with rent, utilities, etc” and being required to issue a 1099, I assume you are referring to a benevolence given to a member, visitor, or office-walkin.

      The IRS requires nonprofits to abide by its benevolence guidelines.

      In accordance to Internal Revenue Ruling 56-304, churches are permitted to make distributions of their funds to individuals provided such distributions are made on a true charitable basis in the furtherance of the purposes for which they are organized. In doing so, in order for all distributions made to individuals to be substantiated upon request by the IRS, it mandates that the church maintain adequate records and case histories to show the following:
      • The church’s objective criteria for disbursing assistance under each program
      • Name and address of each recipient of aid;
      • the amount distributed to each;
      • the purpose for which the aid was given;
      • the manner in which the recipient was selected;
      • the relationship, if any, between the recipient and (1) members, officers, or trustees of the organization, (2) a grantor or substantial contributor to the organization or a member of the family of either, and (3) a corporation controlled by a grantor or substantial contributor.

      Maintain your benevolence records in a secure place for seven years. They are to be kept confidential and only those authorized should have access to them.

      Disbursement Guidelines
       It must be disbursed as means of assistance during the time of a crisis or other hardship.
       It must be consistent with the church’s charitable purposes
       Cannot be issued in the form of a loan. Repayment is strictly prohibited, in any form.

       IRS guidelines state that individuals do not have to be totally destitute to be financially needy; they may merely lack the resources to obtain basic necessities.

       IRS guidelines state that assistance may be given for food, clothing, housing repairs, medical assistance, rent, or mortgage payment to prevent loss primary home, car loans to prevent loss of transportation that would cause additional trauma to families already suffering; travel costs for family members to attend funerals, among to and so forth.
      If the church disburses benevolence payment to a church employee, it is taxable income.

      It is best when possible to pay the creditor directly, instead of the person seeking benevolence.

      Form 1099-MISC is not required when benevolence is given, as it is not for services rendered, but to aid the needy.

      IRS Circular 230 Notice: United States Department of the Treasury Regulations require author to inform you that to the extent this book, any website links, the accompanying CD hereto concerns tax matters, it is not intended nor written to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by United States Internal Revenue Code.

  2. Anonymous says:

    When you know that a musician is only playing trumpet once in the year for less than $600, does the musician need to complete a W9?

  3. I pastor a small local church that is a 501C3, over the past several years a different church from another state has been sending money monthly to help support our ministry. This year someone from their church sent a w-9 form requesting a TIN. No services were rendered by either party, so i’m confused should we fill out the form or simply issue them a tax deductible receipt. It seemed odd to me, but I’m uncertain about the proper use of the w-9. Thanks for any help you can offer.

    • I apologize for the delayed response.

      It is strange for a church to send another church a W-9 for offerings it donate to the church. Were the offerings made payable to an individual? If so, that may be problem. If the offerings are donated to the church, they need to be made payable to the church and not an individual, because this can create tax issues for the individual.

  4. Kevin M. Shaw says:

    Our church organization (501C3) contracted with a company (an LLC) to provide sound equipment and services for an annual church conference. We had a contract and paid the contract. Now, their CPA wants a 1099… is this correct?

    • Because you have already read our article on when a church is to issue a 1099-MISC, I will not repeat that part. Generally, corporations (except legal services) are not issued a 1099-MISC. However, when it comes to LLC’s it depends on how the LLC is taxed. Many are set up as corporations, but the company you are dealing with knows its tax status. Please go to and read the section “Exceptions” for more details.

      IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication

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