How should we account for paying someone for guest preaching?

What would you suggest as best practice for paying someone for pulpit supply/ or filling the pulpit from time to time? What taxes are necessary? How should it be handled? 1099?

Do we just cut them a check for an agreeable amount, etc? How do we categorize the expense?

Comments for How should we account for paying someone for guest preaching?

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What to Include in a 1099 for a Guest Speaker
by: Vickey

Dear Anonymous - MN, I'm going to answer the second question first as it is the easiest =)

In regards to your question: "All the Missionaries and usually any special speaker, submits our check to their agency for record keeping, so do we need to provide them with a 1099 if their agency is keeping track of their income?"

Depends on if you wrote the check out to the individual or the agency. If you write the check to the agency and it is a nonprofit organization, there is no need to file a 1099. If you write the check to the individual and "collectively" you have "paid" them $600 or more in a calendar year... you will need to file a 1099-NEC and provide them a copy.

In regards to this question: "We pay a set amount to mostly Missionaries for speaking and presenting their work. We also reimburse them mileage from where they are coming from to here. Does the mileage need to be included with the speaking amount to be under $600." ...

I do =)

Mainly because most of those guest speakers are going to claim their mileage and any other travel expense that they directly paid... as a "business" expense... when reporting that "income" they received from the church. With a mileage "reimbursement" check...you are writing the check directly to them... so it needs to be included in the 1099 "figuring".

In contrast, when the church pays for the guest speaker's traveling expenses directly such as paying the hotel bill or airline ticket... I don't include those amounts. BUT if they hand me a receipt for a hotel bill or plane ticket... that they paid for and I write a "reimbursement" check to them... I include it in the 1099-NEC amount =)

Now there may be some that disagree with me on using that method and I don't have an IRS page to point you to... to confirm or deny that is the correct way to do it, but it stands to reason for me that any amount "paid" to them (in a check in their name) for their "service" for our church... should be included in the 1099 as they can and will use those travel expenses as deductions against that income when they file their taxes=)
Paying guest or preaching
by: Anonymous - MN

Thanks for you very helpful response to this question from another person.

I would like to follow up with a couple of questions:

We pay a set amount to mostly Missionaries for speaking and presenting their work. We also reimburse them mileage from where they are coming from to here. Does the mileage need to be included with the speaking amount to be under $600.

All the Missionaries and usually any special speaker, submits our check to their agency for record keeping, so do we need to provide them with a 1099 if their agency is keeping track of their income ?
Paying a Guest Speaker
by: Vickey

ALWAYS get a W-9 from a guest speaker or pulpit supply BEFORE you write that check!

They are usually considered Independent Contractors (individuals or companies that do a service for your organization, but are not under the church's control and are not considered employees according the IRS guidelines ).

SO...even if you do not think that you will be "paying" them $600 or more "collectively" in a CY (calendar year) ... you still need to have a W-9 on file for them.

If you pay them $600 or more in a CY, you will need to file a 1099 for them.

The offering you take up for them should ALWAYS be run thru the church's bank account! Don't just hand them the cash and checks from the offering.

I record those donations on "Love Offerings" or whatever income account you have set up for those types of donations.

The check then that the church turns around and issues to the guest speaker is recorded on an expense account such as "Guest Speakers".

Some churches use a "current liability" account to record both the donations and the payments issued to the pulpit supply or guest speaker in the same account and title it "Pass-Thrus".

That might be ok....if you are going to issue the speaker the exact amount of donations received, so the expense "zero outs" the income in that account.

But if you pay them more or less than the offering received.... you are going to end up with a balance in that account...and most of time it's a negative balance as the church writes the check for more than the "deposit" recorded in that account.

Another thing that I don't like about using "liability" accounts, is donations given to an individual are not tax deductible charitable contributions.

So in order for those "gifts" to be considered tax deductible donations, the church must be "in control" of those funds. Which means those "gifts" for the guest speaker should be made out to the church (if checks) and the church should be "in control" of those funds. The church decides how those monies are spent and how much the speaker is paid for their "services".

It's harder to "prove" the church had "control" when those offerings are recorded in a "pass-thru" account ...in my humble opinion=(

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