Pastor Love Offerings.....Taxable Or Not

The church will have a special service to celebrate the Pastor's 4th Anniversary. During this service a love offering will be taken up for the Pastor. If checks are made out to the Pastor will this be considered taxable income to him? How would the church handle the checks made out to the Pastor? If people decide to give the Pastor their offering individually after the service is this considered taxable income to the Pastor?

Comments for Pastor Love Offerings.....Taxable Or Not

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Deacon
by: Anonymous

Why dont the IRS just put out a simlle policy regulation on Love Offering for churches?
love offering
by: Sandi

if you are paying for services it doesn't matter the size of the church or the dollar amount, the pastor is considered an employee.
All money received by the church and given to an employee require a W-2.
Love offering collected and paid to employees are still income.
Most churches are tax exempt
only box one is used for income paid. Box 14 will have any housing allowance that was pre-approved by the church (in writing).
Reimbursements are not on W-2 if a policy for accountable reimbursements is in place (and you have the supporting documentation...other wise they are also included in box 1.....lots of rules, I suggest you go to www.irs.gov and download the publication 15 series.

Prayers
Taxes on Love offering
by: Anonymous

Small Church takes in less than $25,000 for everything so they don't file income tax so they don't give pastor W2 form so does the pastor have to keep up with offering himself an pay taxes on love offerings?
collections for birthday's etc..
by: Sandi

As Vicki posted June 12,2013
"...when a offering is taken up for a minister and the church in turn distributes those funds to the minister either through a church check or cash (by the way giving cash right out of a offering container without recording it...is illegal)...

that is when it becomes taxable income to the minister.

AND ...you as church financial administrators have to be aware that contributions given to or taken up for an individual is NOT tax deductible for the donor and should not be issued a contribution receipt for. See this page for exceptions to that rule: Contributions to an Individual"
Love Offering
by: Anonymous

I once read, but I can't recall where, that if a congregation is asked to give a love offering or a collection is picked up and then given to their pastor for whatever reason, (Birthday, Christmas, Pastor Appreciation, Aniversay) then it is considered income. Yet, if members of the congregation give out of their own free will,without anyone requesting or suggesting that it be done, then it is truly a "gift" and it is not considered income. Makes sense to me.
Church Love Offering Trouble
by: Anonymous

The best way for the church to stay out of trouble is to not take up an offering and tell people if they want to give to the pastor to do so on an individual basic. If the church takes up an offering it has to be counted and must go through the church books. Donors will not receive credit for their givings and it is taxable income to the pastor. Even if they give to the pastor on an individual basic it still can not be claim and is still taxable income to the pastor.
love offering again
by: Sandi

We have a cake during fellowship and sometimes give a de minimis gift (flowers or wall hanging).

People who wish to give do so either by handing their cards to them directly or mail them.

Sometimes people still designate their gifts through the offering, this is applied towards the salary as we do not wish to loose tax exempt status under the "private benefit" rules...

If you are paying less than comparable wages, due to church size/location, You might want to look into making a policy that states the pastor may receive money over salary up to __________, due to the salary being low for this area. Check for samples and be sure you can justify this.

Prayers
How Can You Keep The Church Out Of It?
by: Anonymous

I would like for someone to give me ideas of how their church handles Love Offerings during a Pastor's Anniversary.

The object is to put the burden of honesty on the pastor and not involve the church in anyway, shape or form. The sad part about this is it shouldn't be this hard but clergy looking for ways to collect money without paying taxes on it. Sad.
Checks Made Out to Church
by: Vickey

Regarding this statement: "IRS Publication 517 says......"If the offering is made to the religious institution, it is not taxable to you"

Checks wrote out to the church is not taxable income to the minister. If that were not true then all of the funds given to the church would be taxable income to the founder of the church or the pastor...

However...when a offering is taken up for a minister and the church in turn distributes those funds to the minister either through a church check or cash (by the way giving cash right out of a offering container without recording it...is illegal)...

that is when it becomes taxable income to the minister.

AND as Sandi stated...you as church financial administrators have to be aware that contributions given to or taken up for an individual is NOT tax deductible for the donor and should not be issued a contribution receipt for. See this page for exceptions to that rule: Contributions to an Individual

love offering again
by: Sandi

Just thought I'd stress again to keep the church collection out of it.

If you have someone announce it is their anniversary those felt to give will... if you have someone handing out envelopes or with a collection plate/box/basket... you are "pressuring" people and the church should never make people feel they "have" to give...

You might have a cake for fellowship, as that would fall under the "De Minimis Fringe Benefits" see: http://www.irs.gov/Government-Entities/Federal,-State-&-Local-Governments/De-Minimis-Fringe-Benefits

Prayers
love offering again
by: Sandi

http://www.irs.gov/uac/Eight-Tips-for-Deducting-Charitable-Contributions

also see:
Pub 526 pg 6 "Contributions You Cannot Deduct
There are some contributions you cannot deduct and others you can deduct only in part. You cannot deduct as a charitable contribution:
1. A contribution to a specific individual"


Prayers
I remembered to put my name in :-)
IRS Publication 517 says......"If the offering is made to the religious institution, it is not taxable to you".
by: Anonymous

Below is from IRS Publication 517.....The last sentence says that if the offering is made to the religious institution, it is not taxable. Have the rules change? I was thinking that even if it was made out to the church it would still be taxable income to the person. What am I missing on this one?


Offerings and Fees
If you are a member of the clergy, you must include in your income offerings and fees you receive for marriages, baptisms, funerals, masses, etc., in addition to your salary. If the offering is made to the religious institution, it is not taxable to you.
Keeping The Church Out Of It
by: Anonymous

Just pass out plain blank envelopes to everyone that comes into the building(no reference to the church. When it comes time to take up the offering tell the congregation to put their offering in the plain blank envelope and after the service give their envelope to the pastor as they exit or have someone at the exit with a box to collect the plain blank envelopes. The pastor can get the box and the church is out of it because they have no knowledge of what was given. Would this work???
Love Offerings Are A BIG Headache To The Church!
by: Anonymous

It seems to me the best way to keep the church out of it is to have someone stand at the entrance of the church with a box to let people know if they want to give an offering to the pastor to put it in the box and give to the pastor after the service.....OR, you can have the pastor stand at the back of the church when service is over and tell people to give their offering to him as they exit the church. This way no offering is taken up and the church doesn't have any knowlege of what he recive so if the pastor is ever audited the church will have no knowledge of the amount the pastor received. Wow....The best answer is not to collect a love offering unless you add it to their W2.
Taxable Love Offerings
by: Vickey

Could not have said it any better than the "Anonymous" just did.

If you take up a love offering through the church, it is usually taxable and should be reported on the recipient's W-2.

If donors give their love gifts directly to the minister...it is between that minister and the IRS how it is reported...but as "Anonymous" stated ... the church is out of it then.

The only thing I would add is the IRS doesn't care about the amount...they consider all "love gifts" a payment for services and therefore should be reported and appropriate taxes paid...in or out of the church...through the church or handed personally to them.

However...when it is not taken up in church...the church does not have the obligation to record and report it...it then falls on the minister.
love offering again
by: Anonymous

I correct myself on the last reply...
"During this service a love offering will be taken up for the Pastor"
so you are not keeping the church out of it...
you should NOT take a collection unless the funds are going into the church accounts.

"If checks are made out to the Pastor will this be considered taxable income to him?"
depends on how much he receives he would need to check the IRS site.

"How would the church handle the checks made out to the Pastor?"
return checks to individuals

"If people decide to give the Pastor their offering individually after the service is this considered taxable income to the Pastor?"
again this depends on the amount he receives
love offering again
by: Anonymous

There is a whole article and many FAQ to this one.... https://www.freechurchaccounting.com/love_offerings.html
The one thing that is "good" is that it sounds like you are keeping the church out of it.

Do not take a collection for the pastor if you don't want to add it to the W-2.

Let the people give to them directly...

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