October 26, 2012

Compensation to Volunteers


A church has used the voluntary services of a bookkeeper and would like to gift to her a $500 gift card. Since she is not an employee of the church, is this gift taxable?


The gift card will be treated as taxable compensation for services rendered. If she is an employee, this income will be reported on a Form W-2. If she is not an employee her income will be reported on a Form 1099-MISC (unless her annual earnings fall below $600) and will be reportable by her on Schedule C and also subject to Self-Employment tax on Schedule SE.

Volunteers who incur documented out-of-pocket expenses on behalf of a church may be reimbursed on a tax-free basis. This includes use of an automobile to travel to the church site and on other errands. The mileage reimbursement rate for such volunteers in 2012 is $.14 per mile. In December 2012, the IRS will likely announce its 2013 standard mileage rates.


  1. We rent a school cafeteria for our Sunday services. We sometimes give a gift/tip to the janitor. Do we need to worry about tax implications or reporting for these gift/tips (e.g. give a 1099-Misc etc)?

    1. The payments from the church to the janitor will be viewed as taxable compensation for his/her services. The $600 limit cited in this four year old post is still valid.