Cash gifts or benevolent funds from a church to church personnel.

[kpangelinan]

From the little research I've done in the past and just recently (research meaning, other boards, prior court cases, etc.) it looks like the accounting community has been going both ways on whether or not true benevolent funds, or cash gifts to church personnel with no strings attached (meaning the gift is truly a gift to help with rent, food, or is just a pure love offering and not expecting any services in return) are taxable.

Was wondering what you all thought or if you had any direction to do more research on.

Pub 525 and 526 are pretty clear about black and white situations, but don't go into detail about the situation described above.

Thanks for any help.

[veritas]

Have the ministry refer to

Romans 13:7 Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.

[kpangelinan]

Romans 13:7 Give everyone what you owe him: If you owe taxes, pay taxes; if revenue, then revenue; if respect, then respect; if honor, then honor.

That's good advice, which I know they already adhere too. I was looking for more. Thanks,

[veritas]

Gifts given to clergy

Around birthdays, holidays are taxable income. Call it love gifts or what have you. They have enough tax breaks one would think.

[JohnH]

Yes the tax benefits are nice.
Now if small and medium-sized churches would just meet their obligation to pay their pastor a decent wage, things might even out.

[veritas]

I would

Yes the tax benefits are nice.
Now if small and medium-sized churches would just meet their obligation to pay their pastor a decent wage, things might even out.

Agree with you. The worker deserves his wages.

[kpangelinan]

Yes the tax benefits are nice.
Now if small and medium-sized churches would just meet their obligation to pay their pastor a decent wage, things might even out.

Agreed, good point.

[MAMalody]

From the little research I've done in the past and just recently (research meaning, other boards, prior court cases, etc.) it looks like the accounting community has been going both ways on whether or not true benevolent funds, or cash gifts to church personnel with no strings attached (meaning the gift is truly a gift to help with rent, food, or is just a pure love offering and not expecting any services in return) are taxable.

Was wondering what you all thought or if you had any direction to do more research on.

Pub 525 and 526 are pretty clear about black and white situations, but don't go into detail about the situation described above.

Thanks for any help.

Cash gifts and benevolent funds are actually different. We are already pretty well set that cash gifts generally are taxable. There is a little different twist at retirment. As I understand it as long as the cash gift at retirement is contractually agreed upon prior to retirement and not hooked to any future service, that could be nontaxable. In the MSSP for Ministers it says:“gifts given to a minister, other than retired ministers, may actually be compensation for services, hence includable in gross income” for tax purposes.

Benevolence funds are normally funds to meet some type of financial need due to medical issues, school fund etc to an employee. You are entering real muddy water here. Generally, I would consider it to be taxable income and should be included on the employees W-2. It is extremely difficult to get past the rendering of past or future services. The recommendation is to have the employee received help from a nonchurch source, such as Red Cross, etc. It is also possible that individuals could give gifts directly to the employee bypassing the church entirely. This would seem to remove the taxable income question.

[okie1tax]

Gift?

Yeah, BUT, doesn't it also eliminate the "charitable contribution"?

[RitaB]

Yeah, but

Yeah, BUT, doesn't it also eliminate the "charitable contribution"?

Yeah, but their itemized deductions only amount to $234.12 for "tithes" and $366.00 for medical anyway, and that's counting the vitamins from Wally World. Oh wait, don't forget the three bags of clothes and fridge that were worth "a lot, and I will let you decide on that."

And they have a picture of the bags as substantiation.