My question is about how to handle the upcoming 1099K forms as a 508c1a nonprofit org.
The 508c1a operates as an online church and conducts zoom services regularly. Attendees are church funders who make a regular requested donation of 30 dollars monthly, and they use online payment platforms PayPal and Stripe to do it. The church also sends regular email correspondence in the form of personal life encouragement to funders who donate 5 dollars monthly, with some recipients also receiving the regular emails as part of the 508 church’s mission, even though they have not donated.
I have notified both PayPal and Stripe of the 508c1a status of the online church’s accounts where donations are received, but both companies refuse to classify the payments as donations because the 508c1a designation does not receive an IRS determination letter like a 501c3 gets. Without the IRS determination letter, the donations are treated as exchanges for goods and services, which they see as the donations supporting the monthly zoom meetings and the regular email encouragement.
I am the pastor. I conduct the 508 church’s online service meetings and I write the regular email encouragements. The 508 church is newly formed, just three years old, and I currently have not received a salary as a w2 employee or as a 1099NEC, nor any other type of compensation such as a housing allowance, though the Board has approved it and put it in writing when the time comes.
There are operating expenses for the 508 such as the website domain and platform, a commercial email account, an online video meeting platform, recordings and the storage of the meetings for replay, annual nonprofit registration fees, post office box fees, etc.
Thus far, the 508 has filed zero tax forms of any kind since it’s inception, and as its clergy I have filed zero tax forms also since there has been zero compensation paid to me or anyone else of any kind to operate the 508.
By the end of 2023, the 508’s bank account will reflect more than 600 dollars received in electronic payments from both Stripe and PayPal in 2023 monthly donations, or as they label it, as payment for the sake of monthly goods and services for the church meetings and the email correspondences.
When the 1099Ks arrive for the 2023 tax year from PayPal and Stripe, how should the 508 handle the tax forms? What Turbo Tax product, if any, would be appropriate to report the donations and expenses in order to keep from getting a letter from the IRS regarding a failure to report 1099K earnings?
I have been a personal and self proprietor Turbo Tax user for many years, and I am very familiar with using the Schedule C to report 1099 income in those scenarios. However, as a noncompensated clergy of a 508c1a church now, I have no idea what to do with the coming 1099K forms.
This is my first time attempting to post a question to the Turbo Tax community. Thank you to all who reply, and I’ll tag @Opus 17 who I have noticed replies to nonprofits in the community.
Warmest regards,
deltabravo
