Review of Congregation Donations to Staff Members

Question:

A church recently made its congregation aware that they can give personal Christmas gifts to pastoral staff (if they choose), but that members would receive no charitable contribution credit for tax purposes. Is it correct that those personal gifts are not taxable income to the staff members since they don't run through the church records at all, but are simply personal gifts?

Answer:

This assumption is correct.

There are two ways members of a congregation can give gifts to staff members. One involves corporate action and the other involves personal and individual action.

1) The church can take up a collection for staff members. In this case, the contributions are deductible to the donors, but must be reported as income to the staff members since they are deemed payments received from an employer.

2) Church members can give directly to staff members. In these cases, the donations are not deductible to the donors, but the staff members do not have to report the gifts as income. This action cannot be orchestrated as a corporate activity of the church (as the staff members' employer), but rather as the personal choices of individual members to other individuals.

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MinistryCPA - Corey A. Pfaffe, CPA, LLC

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