October 30, 2012

Church Gifts to "Volunteers"

Question:

A minister is in charge of a restricted benevolence type of fund/ministry. He is not an employee of the church but is a member and does volunteer in various church related activities. The church receives gifts, some of which are directed to his ministry and some that are  specifically directed to him, all of which are deposited into the church's restricted fund. The church also gives him $200 per month from the restricted fund. The church has been giving him a Form 1099 for the $200 per month at the end of each year.  Is this correct, or are the monthly gifts the church gives non-taxable to the minister/volunteer.  Is there any potential that the $200 per month could be classified as a benevolent gift?

Finally, are the gifts to him and/or his ministry tax deductible by the donors?


Answer:


It is apparent that the church is providing general and donor-designated financial support for a minister who is providing services endorsed by the church. If the church supports an individual who is doing ministry work, then the support given to this individual will be taxable.

If he is genuinely performing no ministerial services, then it may be appropriate to classify the monies provided him as non-taxable benevolence. 

However, it would be difficult to convince the IRS that (1) an individual could have donors who direct money to his ministry, (2) donors who donate to him personally, and (3) a church who directs funds to him, solely because he is in need of benevolence.

Something to keep in mind: gifts given to support the work of the church and the activities it endorses are tax deductible.

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