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Church Payment on Minister's Student Loan

Question:

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?

Answer:

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.

Comments

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

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

    ReplyDelete

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