A bi-vocational pastor works a full-time secular job, and also shepherds a small church. He receives no salary from the church. Once a year the church membership on its own initiative takes up a collection and provides it to the minister as a “pastor appreciation” gift. Does this gift represent taxable income?
This situation mimics the case of itinerant ministers. To the extent that the minister has unreimbursed expenses it will be non-taxable (reportable as income less expenses on Form 1040, Schedule C). The individual here apparently holds himself out as a minister of the gospel and apparently is recognized as such by a grateful congregation that collected a pastor appreciation gift. This love offering is taxable to the extent it exceeds his business (ministry) expenses.