Churches and ministries routinely work with individuals and businesses that are not employees. Guest speakers, musicians, contractors, maintenance providers, and other service providers are just a few examples.
Payments for these services may need to be reported to both the IRS and the contractors themselves on Form 1099-NEC, Nonemployee Compensation.
Understanding the differences between the IRS’s definitions of employee and independent contractor, collecting the appropriate information from vendors, and maintaining good records can make year-end reporting much easier.
What is Form 1099-NEC?
Form 1099-NEC is used to report certain payments for services made in the course of a trade or business (including the non-profit “business” of your ministry) to individuals or businesses that are not treated as employees.
Your regular employees generally receive Form W-2, Wage and Tax Statement at the end of each year to assist with their tax preparation. Not so for those independent contractors. The qualifying payments for services performed by independent contractors and other non-employees are generally reported on Form 1099-NEC.
The IRS establishes a reporting threshold for Form 1099-NEC. For the 2026 tax year, you must provide this form to any contractor to whom you paid $2,000 or more. Beginning in 2027, that figure will be adjusted each year to account for inflation. Because that amount may change, churches should consult the current IRS Instructions for Forms 1099-MISC and 1099-NEC when determining whether a payment must be reported.
Certain payments may also be reportable regardless of the usual dollar threshold, including payments subject to federal backup withholding.
Who Might Receive a Form 1099-NEC?
Depending on the circumstances and applicable IRS requirements, examples of individuals or businesses a church pays for services might include:
- Guest speakers;
- Guest musicians or artists;
- Lawn or landscaping services;
- Plumbers and electricians;
- Cleaning or custodial services;
- Consultants and other independent contractors; and
- Attorneys or law firms.
Not every payment to a vendor requires Form 1099-NEC reporting. The type of payment, amount paid, tax classification of the recipient, method of payment, and other factors can affect reporting requirements.
Payments to corporations are generally exempt from Form 1099-NEC reporting, but important exceptions apply. For example, payments for legal services may be reportable even when the attorney or law firm operates as a corporation.
Churches should consult the current IRS instructions or a qualified tax professional when determining whether a particular payment is reportable.
Start With Form W-9
One of the best ways to simplify year-end reporting is to obtain a completed Form W-9, Request for Taxpayer Identification Number and Certification, from individuals and businesses that provide services to the church.
Form W-9 provides information needed to determine whether reporting may be required, including the vendor’s:
- Legal name;
- Business name, if applicable;
- Federal tax classification; and
- Taxpayer Identification Number.
Rather than waiting until the end of the year, churches may find it helpful to make collecting Form W-9 part of their normal process when establishing a relationship with a new service provider.
Completed Forms W-9 should be retained with the church’s records. Form W-9 is generally not submitted to the IRS by the church.
When Is Form 1099-NEC Filed?
Form 1099-NEC is generally due to both the recipient and the IRS by January 31 following the calendar year in which reportable payments were made, subject to IRS rules when the due date falls on a weekend or legal holiday.
Electronic filing requirements may also apply. Organizations filing a combined total of 10 or more information returns generally must file electronically. The IRS aggregates most information returns, including Forms W-2 and Forms 1099, when determining whether the electronic filing requirement applies.
Because filing requirements, reporting thresholds, forms, and procedures can change, churches should review the current IRS instructions each year.
Employee or Independent Contractor?
Form 1099-NEC should not be used simply because a church chooses to call a worker an independent contractor.
Whether an individual is an employee or independent contractor depends on the facts and circumstances of the working relationship and applicable IRS rules.
The IRS generally considers factors involving the degree of control and independence in the relationship, including behavioral control, financial control, and the type of relationship between the parties.
Churches that are uncertain whether a worker should be treated as an employee or independent contractor should consult the IRS guidance or a qualified tax professional
Make Year-End Reporting Easier
Good recordkeeping throughout the year can make Form 1099 reporting much simpler.
Churches can help prepare by:
- Obtaining a completed Form W-9 from service providers before or early in the working relationship;
- Maintaining accurate records of payments made to each provider;
- Reviewing vendor information before year-end;
- Checking current IRS reporting thresholds and requirements; and
- Consulting a qualified tax professional when the proper treatment of a payment or worker is unclear.
Current IRS Resources
For the most current information, visit:
- IRS – Am I Required to File a Form 1099 or Other Information Return? (link)
Provides current reporting thresholds and general information about which payments require information reporting.\ - IRS – Instructions for Forms 1099-MISC and 1099-NEC (link)
Provides detailed current requirements for Form 1099-NEC, including reporting thresholds, exceptions, attorney payments, and filing instructions. - IRS – Form W-9, Request for Taxpayer Identification Number and Certification (link)
Provides the current Form W-9 and instructions. - IRS – Independent Contractor or Employee? (link)
Provides guidance for determining whether a worker should be treated as an employee or independent contractor. - IRS – Information Return Reporting (link)
Provides current filing deadlines and electronic filing information.
Servant Solutions provides this information for educational purposes and does not provide tax or legal advice. Churches and individuals should consult qualified tax professionals regarding their specific circumstances.