I received a 5k gift from my church for all my volunteer hours this past year. How do I report it? Also, I want to deduct volunteer mileage, where does that go?

[KathrynG3]

To report the money gift from your church for your volunteering, report this as other income.

In TurboTax Online:

1. From the left menu, go to Federal and select the first tab, Wages & Income
2. Add more income by scrolling down to the last option, Less Common Income, and Show more
3. Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
4. Choose the last option, Other reportable income and Start and Yes
5. Enter the applicable description and amount and Continue

In TurboTax CD/Download:

1. Select PERSONAL tab.
2. Select Personal Income and I'll choose what I work on.
3. Scroll down to the last category, Less Common Income.
4. Select Miscellaneous Income, 1099-A, 1099-C and Start.
5. At Let's Work on Any Miscellaneous Income scroll down to Other Reportable Income and select Start and Yes.
6. At Other Taxable Income, enter a description naming the Payer and enter the amount and Continue and Done.

Mileage and travel expenses are entered in the Charitable Deductions area. Start by selecting Donations to Charity in 2020 to see the option. 

However, all donations must be reduced by the amount of the gift. Only the portion of the donation that is greater than the amount of this benefit would be deductible.

For more information, see IRS Charitable Contributions Deductions.

[Opus 17]

This is actually a very dangerous area, and you and your church are both at significant risk in case of an audit. They really should not be doing this.

Let’s start with some basic principles.

1. A true gift, given with no expectation of reward or returned service, is not taxable income.

2. If this is compensation for work that you performed, it is not “other income“, it is self-employment income and you are required to file a schedule C and pay self-employment tax as well as income tax.  The church is required to report any amount paid to you over $600 on a form 1099-NEC.

3. The church is allowed to reimburse you tax-free for any expenses that you incur in performing volunteer work for the church, if you provide the church for receipts. This can include your mileage, although it more typically would include the cost of supplies or other items that you bought for church use.   
4. If the church is reimbursing you for your time and effort, that is definitely considered self-employment income, and the church should be giving you a 1099–NEC form and you should be reporting it on schedule C.

5. You can deduct unreimbursed mileage that you drive in service to a charity, it is in the charity donation section and the standard rate is either $.14 or $.17 per mile.

6. You can’t take any deduction for donations to the church or expenses that you pay for the benefit of the church if you are reimbursed.

You said this was money “given“ to you in return for your “volunteer” service.  This puts both you and the church at risk in case of audit. The IRS would very likely look at any money provided in return for a service and self-employment income, with you being a self-employed independent contractor or handyman or helper.  The church is at risk because they would legally be required to issue a 1099-NEC, in the church can also have its exempt status endangered if it uses its funds to benefit members in inappropriate ways.  You would be at risk if you are audited and asked to explain why you did not pay self-employment tax on this money, if it was given in return for a service.

[Moet131]

Opus can you please contact me at [phone number removed].  I have questions re: this subject that are too much to type here.  I will compensate you for your time.  There's some things re: this topic that I have specific questions on. I also want to make sure my church is doing things correctly. Thank you

[Moet131]

Phone number was removed so email is [email address removed] 

Thank you Opus17

[Opus 17]

@Moet131 

I’m not a tax professional, just a knowledgeable amateur, so I don’t take fees and don’t do private consults.  If you don’t want to post a public discussion you can use the private message feature on the board.