Clergy Gift and 1099-MISC

[AmpFL]

Hi I'm a pastor that received a W-2 for 2016 and pay quarterly taxes. I received a Christmas gift of $1,050 and then got a 1099-MISC. Can I file this under personal or does it have to be business? I have no business expenses to help defer the tax for this as it was a gift. All my regular expenses I enter under employment section of personal.

[Opus 17 · Accepted solution]

The church should have included that in box 1 of your W-2.  Ask them to cancel the 1099-MISC and issue a corrected W-2.

If they won't, then you need to report in as self-employment income on schedule C so that the correct self employment tax is calculated.  Use employment code 813000.

Note that turbotax expects your W-2 to have boxes 3-6 blank.  Then you check the box for religious wages on the special circumstances page.  If your W-2 looks different, the church may not be paying you as clergy and Turbotax won't compute the correct tax without manual corrections.

This is a good resource. http://www.ecfa.org/PDF/2016-Preparing-Tax-Returns-For-Clergy.pdf

[Opus 17]

By the way, if this was a gift from the congregation, then it would not be taxable if it was given directly to you, only if it passes through the church account or the church controls the gift in some other way. As a common law employee, anything of value you receive from the church is considered taxable income (unless it falls under a special tax provision like the housing allowance or certain non-taxable employee benefits.) If the church declares a christmas gift for you, that becomes part of your compensation, even if the funds are collected from church members. But if the membership has a drive and collects cash and gift cards and gives them to you or your family, and it is not official sponsored by the board, and funds don't go through the church account, then it's not compensation as does not need a 1099 or be on your W-2. It would just be free gifts from the members to you.