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A Simple Checklist for Stress-Free 1099s

Filing 1099s might not be the most exciting part of ministry life, but it’s one of those crucial behind-the-scenes tasks that keep everything running smoothly—and legally. Whether you’re paying a guest speaker or hiring someone to fix that eternally squeaky church door, ensuring your 1099s are in order is key. Let’s break it down into manageable steps and clear up the mystery.

What Are 1099s and Why Do Ministries Need Them?

Think of 1099s as the IRS’s way of keeping tabs on payments made to folks who aren’t on your payroll. Ministries most commonly deal with two types of 1099 forms:

  • Form 1099-NEC (Non-Employee Compensation): Introduced in 2020, this form replaced the old 1099-MISC for reporting payments made to contractors and guest speakers. For example, if you hired a guest preacher or someone to run sound for your annual conference, they’ll likely receive a 1099-NEC.

  • Form 1099-MISC: While this used to cover a wide range of payments (including those now on the NEC), it’s now reserved for specific payments like rent, legal fees, and awards. For instance, if your ministry rents office space or pays an attorney (hopefully not too often!), this is the form you’ll use.

Filing the right forms helps your ministry stay compliant with tax laws—and keeps those dreaded IRS letters out of your mailbox.

Who Needs a 1099?

Here’s a quick guide to help you determine who gets a 1099:

Form 1099-NEC

  • Issued to independent contractors, gig workers, and guest speakers paid $600 or more during the year.

  • Pro Tip: Payments to C corporations and S corporations are generally exempt. This information is typically found on the vendor’s W-9 form.

  • Important: Employees don’t get a 1099—they get a W-2. If you’re unsure whether someone is an employee or a contractor, check out our article on worker classification.

Form 1099-MISC

  • For vendors or individuals paid $600 or more for rent, legal fees, or other qualified payments.

  • Examples:

    • Renting a venue for a major church event? That’s a 1099-MISC.

    • Paid out a legal settlement? Also a 1099-MISC.

Get Your Ducks (and W-9s) in a Row

Scrambling for vendor details in January isn’t fun. That’s why collecting a W-9 from every vendor—even if you think they won’t hit $600—is a lifesaver. Why? It’s much easier to have their info ready than to track them down during their vacation (or while they’re ignoring your emails).

Here’s a pro tip: Most accounting software can run an “Expenditures by Vendor” report. Use this to identify vendors who’ve been paid $600 or more and double-check that their W-9 is on file. It’s a small step now that can save you a lot of headaches later.

Filing Deadlines and Methods

Filing deadlines depend on the type of 1099:

  • 1099-NEC: Due January 31st, both to the contractor and the IRS.

  • 1099-MISC: Paper filings are due March 1st, and electronic filings are due March 31st (or the next business day if these fall on a weekend or holiday).

When it’s time to file, online tools like Track1099 or Tax1099 make the process straightforward. These platforms can even send forms directly to contractors and perform TIN checks before filing to ensure taxpayer-identification numbers match IRS records. This added feature helps you catch errors before they become a problem.

Double-Check Everything Before Filing

Taking a few moments to review your forms can save you from costly corrections later. Here’s what to verify:

  • Payment Totals: Double-check records to ensure accuracy. Don’t include reimbursements for travel or supplies in the 1099 total—this is a common mistake!

  • Names and TINs: Match names and taxpayer identification numbers (TINs) with the vendor’s W-9.

  • Addresses: Ensure addresses are up to date so forms don’t get lost in the mail.

Special Considerations for Ministries

Ministries have unique situations that can make 1099 preparation tricky. Here are a few examples:

  • Guest Speakers: A one-time sermon payment counts as non-employee compensation—even if they donate their honorarium back to the church, you still need to file a 1099-NEC.

  • Designated vs. Restricted Funds: Payments from designated funds are still subject to 1099 requirements. Track where the money came from and how it was used.

Reimbursements: Covered a guest speaker’s travel expenses? Reimbursements aren’t taxable income and shouldn’t be included on the 1099.

Filing Early Comes with Big Benefits

Filing your 1099s early comes with significant benefits:

  • Easier Corrections: Mistakes happen—maybe you misspelled someone’s name or entered the wrong Social Security Number. If you file early and notice an error, you’ll have time to correct it and submit a revised 1099 before the January 31st deadline. This saves you from having to deal with amended filings later, which can be more complicated.

  • Avoid the Rush: January is a busy time for bookkeeping and tax preparation. Getting your 1099s done early reduces stress and frees up your time for other priorities.

A little proactive effort can save you from a last-minute scramble and ensure compliance with minimal hassle.

Wrapping It Up

Preparing 1099s doesn’t have to be overwhelming. With a little organization—like collecting W-9s early, using TIN checks, and tracking payments—you can make tax season a breeze. And remember, if you’re ever unsure or need a hand, we’re here to help.

Have questions or need assistance with your 1099s? Contact us today, and let’s tackle this together!

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