March 21, 2011

Church Payment on Minister's Student Loan


A church collected a love offering for its youth minister and paid the full amount received directly on his student loans. The money never went directly to the minister but to the bank/lender. Is the love offering amount that was paid to the bank considered income and, therefore, taxable for the minister? If so, is that amount to be reported on Form W-2?


This type of compensation does not enjoy a statutory classification as a non-taxable fringe benefit. It is taxable to the youth minister and reportable on Form W-2.

Hopefully, this action occurred early in 2011 so that the minister may consider tax planning alternatives to reduce his tax. He may also need to make estimated tax payments.


  1. Can a church set up the payment of student loans as a reimbursable expense under the minister's compensation?

  2. Unfortunately, this is not in the qualified non-taxable fringe benefit category.