What is taxable compensation for a pastor?

by Kathy Butler
(Corning, Arkansas)

Our pastor does not receive a salary and does not work a job outside of the church. The church does give him love gifts throughout the year for birthdays, Christmas & Pastor appreciation month. Those are just love gifts. Not compensation for anything. So would we still give him a 1099? Since it is not paying him for anything we are just giving him monetary love gifts on those days.

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Thank you
by: Kathy Butler

Thank you D Fry and Lewis for your help and insight. I wanted to make sure we were doing it correctly and we are. Those questions were asked by a couple of people at our last business meeting so I thought I would put the questions here. Yes. We are giving him a 1099 each year. Thank you again.
What is taxable?
by: Lewis in NC

Well stated D. Fry.
Pastor's love gifts
by: D Fry

You say it's not compensation, but it really is. Why else would you be giving it to him? Would you give it if he didn't do anything for the church?
More importantly, if the church solicits it for him, then the IRS views it as taxable compensation, and you must account for it on a form 1099, and he must pay tax on it. Read more on this site about love offerings and church responsibilities.

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