Every January, churches across the country scramble to figure out who needs a 1099. Some churches send them to everyone they paid. Others send them to no one. Most are somewhere in between, operating on instinct rather than policy. Here is what the rules actually say.

What a 1099-NEC Is and When It's Required

Form 1099-NEC (Nonemployee Compensation) is the form used to report payments to independent contractors and other non-employees. If your church paid a person -- not a business -- $600 or more during the calendar year for services, you generally must issue a 1099-NEC to that person and file a copy with the IRS by January 31.

Common church payments that typically require a 1099-NEC:

  • Guest speakers and preachers paid honoraria
  • Musicians and worship leaders paid as contractors
  • Graphic designers, web developers, and photographers
  • Contractors for building maintenance or renovation work
  • Counselors or coaches paid for services outside of employment
  • Childcare workers classified as independent contractors
Key Takeaway

The $600 threshold is cumulative across the full calendar year. If you paid someone $200 in March, $200 in July, and $250 in October -- that's $650 total, and a 1099-NEC is required even though no single payment hit the threshold.

Important Exceptions

Not every payment of $600 or more requires a 1099. The most significant exceptions:

  • Payments to corporations. If the payee is a corporation (including an S-Corp), you generally do not need to issue a 1099-NEC. However, payments to attorneys are an exception -- you must issue a 1099 for attorney fees regardless of the business entity type.
  • Payments via credit card or third-party payment networks. If you paid through PayPal, Venmo for Business, Square, or a credit card, the payment processor handles the reporting through Form 1099-K. You do not issue a 1099-NEC for those payments.
  • Reimbursements under an accountable plan. Reimbursements for actual business expenses under a properly structured accountable plan are not compensation and do not require a 1099.
  • Employees. People who are employees receive a W-2, not a 1099. This is a critical distinction -- and misclassifying employees as contractors is one of the IRS's top enforcement priorities. See our employee vs. contractor guide for details.

A Word on Ministers

Ministers present a unique situation. Most ministers who serve a single church as their primary employer are employees and receive a W-2. However, guest ministers, evangelists, and ministers who conduct weddings or funerals as independent services are typically contractors and receive 1099-NECs for those payments.

The housing allowance is reported on a W-2 in Box 14 -- it is never reported on a 1099. If you are issuing 1099-NECs that include housing allowance amounts, that is a structure problem that needs to be corrected.

Watch Out

Issuing a 1099-NEC to someone who is actually an employee does not protect the church from payroll tax liability. The IRS looks at the actual working relationship, not the form used. Churches that misclassify employees as contractors can face back payroll taxes, penalties, and interest -- sometimes reaching back several years.

Collecting the Information You Need

To issue a 1099-NEC, you need the payee's legal name, address, and Taxpayer Identification Number (TIN) -- either a Social Security Number for individuals or an EIN for businesses. The right way to collect this is through Form W-9, which the payee completes and returns to you.

Best practice: collect a completed W-9 before making any payment to a new contractor. Do not wait until January to figure out who is missing information. Chasing down W-9s in January is avoidable friction that causes churches to miss the filing deadline every year.

Filing Deadlines

For Form 1099-NEC, the deadline is January 31 -- both for providing copies to recipients and for filing with the IRS. This is a hard deadline. Late filing penalties start at $60 per form for filings up to 30 days late and escalate from there.

How Dime Handles This

We manage 1099 preparation and filing for every church client we serve. That means tracking payments throughout the year, maintaining W-9 records, preparing the forms, and filing on time -- including the IRS copy. We also flag classification questions when we see them so they get resolved before they become a compliance problem.

If your church has never had a consistent 1099 process, or if you are not confident that prior year filings were correct, reach out to our team. It is worth getting this right.