1099 vs. W-2? Housing vs. Salary vs. Love Offerings?

by Steve Fredlund
(North Branch, MN, USA)

Question regarding pastoral support:

I've read through a ton of your posts and first want to say thank you and the other participants. I am helping a gentlemen start a small church and could use your help.

I have a general understanding of things, but still struggling with the best approach given our situation. Here are the key elements:

• He is planning to get support from people/organization outside of the church community, much like a missionary might raise support, rather than being paid out of the general fund.
  
  
• Some/most of the donors would like to receive a tax deduction on their support of him so are a bit reluctant to write him checks directly; they would like to go through the church to be able to get the deduction.
  
  
• He & his family make a very modest income and will be receiving very modest support, so it is likely that their income taxes due for the year will be very minimal or nothing. Further, the support in total would likely be less than that threshold for pastoral housing allowance.
  
  
• We would also like to avoid the complexities and/or cost of dealing with payroll taxes, filings, etc.
  
  
• We would like to consider incorporating regular love offerings into the formula for supporting his family.

So, my thought is that we would allow all contributions (support, love offerings) to flow through the church as tax deductible and then give him a check which would be taxable income.

Is it that simple? Then, would the income we report to him be done through a W-2 (with no withholdings) or a 1099-MISC or some other mechanism. Bear in mind, we want to make this as simple as possible to start. My apologies for the length of this, but want to be thorough to hopefully get an answer that brings clarity.

Thanks so much!!!!

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