Non staff gifts

by Dave
(KC, MO, US)

We have several Elders who do not receive any compensation throughout the year.

They have no "contract" or "guarantee" of any bonus or Christmas gift.

However, the deacons may decide to do so at the end of the year or at other times through our benevolence fund.

Is that still a taxable income for those men even though they are not paid staff who receive or expect regular payment?

Comments for Non staff gifts

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Taxable "Gifts"
by: Vickey

This is a difficult question that is usually asked around this time every year=(

Sometimes I have clients that are bewildered and upset when I ask for W-9s for volunteers, elders, etc. to issue 1099-NEC for "gifts" of $600 or more "collectively" for the year.

There is just no way to get around it...if you gave them an appreciation or love offering for their tireless efforts throughout the year ...the IRS considers it "payment for services".

The hard part is that those individuals were not told it was taxable income to them at the time the gift was given, so finding out now is hard on them and on the church administrator that now has to tell them ...but the penalties of not filing a 1099 is too steep to ignore =(

By the way, the gift should not be classified as "benevolence" which is not usually taxable to the recipient.

Please see more on properly administering a Benevolence fund by clicking on RESOURCES at the top of this page and then...CONTRIBUTIONS...then go down the page to the "Benevolence Fund" article

or...

copy and paste this in your browser:

https://www.freechurchaccounting.com/benevolence-fund.html

I will throw one more "monkey wrench" into this conversation. Giving gifts to Elders and Board Members may skirt close to "private inurement" issues...depending on the amount...and endanger your tax exemption status or even worse...as they may be considered "insiders".

Read more on private inurement:
https://www.freechurchaccounting.com/private-inurement.html
Non staff gifts
by: Anonymous -MN

If the gifts amount to more than $600 the gifts needs to be reported on a 1099 Misc as income.

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