Discussion:Bible Student Support Taxable???
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Discussion Forum Index --> Tax Questions --> Bible Student Support Taxable???
| 4 April 2007 | |
| I have a situation where the church sends support to a former member who is training to become a missionary. Many of the members have made "charitable contributions" earmarked for this individual. Most hoping to take a charitable deduction for the money. I understand that if the funds are made for a specific person this is not a charitable contribution. Since the funds were sent by the church, the church issued the individual a 1099 for the earnings. Now one member, the individual parents are very unhappy, because they did not get the charitable deduction and the idividual has to pay taxes on the money. They would like the 1099 reissued without their funds included, because their funds are a gift. I do not believe the church can reissue the 1099 without their funds, since the church received and disbursed the funds. Any thoughts or help would be appreciated. They also do not feel these funds should be subject to SE tax. | |
| 4 April 2007 | |
| I do not know. I know that the amount sent each month could vary based upon the members contributions. The person receiving the funds is the minister's son. | |
| 4 April 2007 | |
| I don't see how it's both nondeductible and taxable to the recipient...seems it's either a gift from the contributors or a charitable contribution...could be wrong, but doesn't make sense | |
| 4 April 2007 | |
| A charitable contribution must be made without any control over where or how the money is spent, therefore it will not qualify as a charitable donation. That is my understanding. | |
| 4 April 2007 | |
| One suggestion is that the church set up a education fund for such donations. Our church has different accts, youth, seniors, missionary, blding etc. The deacons or elders along with input from the congregation will recommend how the monies be spent. This way the minister's son name will be out of the picture and all donations would be deductible. I don't think a Form 1099 was correct. I'm with Kevin on this, this sounds like scholarship to me.
Dar | |
| 4 April 2007 | |
| Do you think that the monies given should have been included in the members giving statements? | |
| April 4, 2007 | |
| Yeah. Structured correctly, these are charitable contributions to the church, who then can give money to whomever it wants. Not even a scholarship necessarily, tho' with the pastor's son, best to be cautious. Shouldn't be income to the student, tho'. | |
| 4 April 2007 | |
| Tsedtal, in my opinion, its how they wrote the checks out. If it is mentioned in the memo a particular person's name then that would be showing control. A true donation is without strings. No donation check should ever had anything indicated in the memo.
Answer to your question, only the donations that did not indicate a name in the memo would be my thinking. Dar | |
| 4 April 2007 | |
| JR, I looked up a paragraph that was bugging me regarding this problem & I may be reading too much into it. The statment in Pub. 526 states "Contribution must be made to a qualified organization & not set aside for use by a specific person". Would this apply in this case? Set me straight, please
Dar | |
| April 4, 2007 | |
| That's what I'm saying, no designation, merely a contribution to the church, who then chooses where it goes. It's a tough line...I wrestled with it personally a couple years ago when a family in our church lost their home and five year old daughter in a fire. The church was given over $100k (yeah, large church), who then gave them 100k+. I do their tax returns! Everything I found at the time said it was non-taxable. DO NOT REPEAT DO NOT TELL ME ANYTHING CONTRARY NOW... | |
| 5 April 2007 | |
| JR, your situation may not be the same as Tsedtal's. Clearly the amounts given to the family after the fire are a benevolent gift and nontaxable to the recipient. Tsed's missionary-in-training, however, may not be the same. If the M-I-T is peforming services for which he is being remunerated, the church is correct to give him a 1099. However, if the church is paying his Bible school tuition or something similar and is not paying him for services rendered, it may well not be taxable to him. As for the deductibility of contributions, if the checks came into the church with kid's name on memo line, then probably it should not be considered a contribution. But there are many parachurch organizations who send their staff out to solicit support. The support is given to the parachurch organization for the support of the individual. As long as the organization and donor acknowledges that the organization is not legally bound to channel the donation where the donor specifies it will fly. Doesn't matter that in 100% of the cases previous, the donor's wishes were honored, the amount is considered a contribution. But clearly, if the church considers it a gift to the kid and not a contribution to the church, no 1099 should be issued because that is inconsistent with the concept of a gift. | |
| 5 April 2007 | |
| The problem began because Mom and Dad wrote their checks for their child to the church along with the other members. All of the money had a name in the memo section. The parents then expected to receive a charitable donation deduction for the monies ear marked for their son. When such deduction was not included in their tithing statement they wanted their amount removed from his 1099. This sounds like money laundering to me. Back to the problems that have caused such scrutiny to charitable contributions by the IRS. | |
| 5 April 2007 | |
| I would agree with M&D. Either it is a contribution, deductible to them, or a gift, nontaxable to the kid. Can't be both nondeducible to them and taxable to kid. | |
| 5 April 2007 | |
| If the church retained control over the donated funds at all times, there would be a charitable deduction, and there would be no income recognized by the child. | |
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