Oh no! Two people came up with the same new way to ask an old question - besides the W-2 that I issue to an employee, can I give him/her a 1099 also, for special work done?
The answer is always the same - NO!
The new twist was this - Our minister sometimes receives stipends for services offered a church member (e.g., a wedding, funeral, baptism, etc.), but the check is written to the church. Can I issue a 1099 for these funds, since it's not a part of the budgeted salary? The answer is still NO!
Now if a member gives a stipend directly to a minister, that should be considered self-employment income and not reported on a W-2. If you have it, see Richard Hammer’s book, Church and Clergy Tax Guide: 2007. He’s a lawyer and CPA who’s an expert on church and clergy tax issues. Talking specifically about fees received for marriages, funerals, etc., he says “such fees ordinarily will be self-employment earnings for the minister if received directly from the members, and not employee wages.” Page 181.
But if the church accepts a check from a member that's supposed to be directed to the pastor, and then transfers it on to that pastor, those funds need to be shown on the pastor's W-2.
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