monthly focus ~ helping missionaries and benefiting donors

TIPS FOR YEAR-END GIVING

A Quick Guide to Helping Churches and Benefiting Donors

Facts you need to know that help your missionaries and benefit you as a donor

Did you know that:

Checks from a church made payable to a missionary may result in additional taxable income to the missionary.

The IRS tax code requires business organizations (including churches) to report any disbursements to an individual that amounts to $600 or more in any given calendar year on Form 1099 – Miscellaneous. The business organization must keep a copy, send another copy to the missionary, and the original to the IRS. The IRS will use the 1099 – Miscellaneous form they receive to check the missionary’s Form 1040 to make sure the individual included it as income. The dilemma: a missionary may have to report a donation as income twice.

Did you know that…

Checks written to and sent to a mission organization rather than the missionary protects missionaries from additional taxable income.

Most mission organizations (including EBM) require that donations sent to a missionary whether for support, for an honorarium, or other ministry needs, be sent to their missionary agency for reporting purposes. If a donation is designated for a special ministry project of the missionary, EBM will treat it as a business expense of the Mission rather than the missionary when those funds are disbursed so that the missionary does not have to report it on their tax return.

When the church makes the check payable to the mission organization, they eliminate the need to file a 1099 as well as prevent an income tax headache for the missionary.

Did you know that….

Checks written by an individual payable to a missionary are not tax deductible.

Checks from an individual made payable to a missionary are not tax deductible. The IRS does not allow any individual to give a donation to another individual (a missionary) and receive a tax deduction for it.

When the individual makes the check payable to the missionary organization, the donation is deemed given to the mission organization even though the intention of the donor is to give to the “ministry” of the missionary. This eliminates any possible difficulties with the IRS for the donor, the missionary, and the mission organization. That is a win, win, win solution.

Did you know….

The IRS will treat donations as non tax-deductible if the missionary’s name appears anywhere on the check.

Many individuals will write the name of the missionary on the memo line. The IRS can insist that the donation is non tax deductible because of the designation. To designate funds for a missionary, please include a separate note with the check.

Did you know…

Tax deductions are handled in a similar way for a business as for individual donors. 

Checks from a business that is not a non-profit organization are treated like an individual as far as tax deductions for a donation to a missionary are concerned. A business that is a non-profit organization would be treated like a church as far as donations to a missionary are concerned.

Did you know….

Personal gifts to missionaries may be treated as taxable income to a missionary.

Checks from a church (made payable to a missionary or a mission organization) that are designated as a personal gift to the missionary (birthday gift, Christmas gift, etc.) may or may not be treated as taxable income to the missionary depending on the circumstances. If the source of the funds given to the missionary is from the general funds of the church for which tax-deductible receipts have been given to the members of the congregation, the personal gift is taxable income to the missionary according to an IRS ruling. 

If the church wants the gift not to be taxable income to the missionary, the church needs to inform the members that no tax-deductible receipts will be issued for the donations to be given for the special personal gift to the missionary. When the church sends those funds to the mission organization, they need to inform the mission organization that no tax-deductible receipts were issued for the personal gift to the missionary.

Feel free to contact the Treasurer of EBM for more information about the IRS and your donations. 

For specific information about Year-End Giving opportunities, contact ebm@ebm.org

Garold L. Paxson, Jr. - EBM Treasurer