Preparing 1099 Forms
Believe it or not, 2025 is winding down. As we move through the last quarter of 2025, it’s time to turn our attention to one of the most important compliance tasks for churches: preparing 1099 forms. These forms ensure that payments made to non-employees—such as independent contractors, guest speakers, musicians, or service providers—are properly reported to the IRS. Careful preparation now helps us avoid penalties later and demonstrates our commitment to transparency and good stewardship.
Why 1099s Matter
IRS Compliance: The IRS uses 1099s to track income that isn’t reported through payroll.
Transparency: Filing accurately builds trust with vendors, donors, and our community.
Avoiding Penalties: Late or incorrect filings can result in fines, which can be costly for nonprofits.
Who Needs a 1099?
Generally, you must issue a 1099-NEC if you paid $600 or more during the year to:
Independent contractors or freelancers
Guest speakers, musicians, or honoraria recipients
Service providers such as janitorial, landscaping, or IT support
(Note: Payments to corporations are usually exempt, but always double-check IRS rules.)
Steps for a Smooth Filing Season
Gather W-9s Early
Request a completed W-9 form from every contractor before issuing payment.
This ensures you have the correct legal name, address, and taxpayer identification number.
Review Your Records
Run year-to-date reports from your accounting system (QuickBooks, etc.).
Flag any vendors who meet the $600 threshold.
Verify that you have a W-9 on file for the vendors / contractors. If you do not, be proactive and send them a W-9 form to complete in October or November. This will help avoid a rush at year end.
Verify Information
Double-check names, addresses, and tax IDs against W-9s.
Correct errors now to avoid rejected filings later.
Meet the Deadlines
January 31: Send 1099-NEC forms to recipients.
January 31: File with the IRS (electronic filing is encouraged).
Keep Good Records
Retain copies of all 1099s and W-9s for at least four years.
Document your process for accountability and future audits.
Remember, IRS rules can change. Check the latest instructions each year before you file. You can find the rules on the IRS website. Click here to access the website.
I have created a 1099 preparation checklist you can use for your financial policy manual. Click here to access the checklist.
Preparing 1099s may not be glamorous, but it’s an essential part of faithful stewardship. By handling these forms with care, we not only stay compliant but also model integrity in how we manage the resources entrusted to us.