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Memorial Fund for Employee of the Church: Taxable?

Question:

A member of a church just passed away leaving a wife and six children. The church wants to have a memorial fund that helps the wife. Donations to the fund are not deductible, correct? Would the gifts be included as taxable income to the wife? If the wife was an employee of the church, would the gifts be taxable income to her?

Answer:

Donations to a church are deductible as a charitable contribution. This is true whether the donations are given to the general fund, or marked for a specific fund account such as a memorial fund.

Gifts from a benevolence (memorial) fund are discussed in the following three blog posts:

Benevolent Fund Disbursements to Employees

Benevolent Gifts to Employees (Emergency or Not?)

Benevolence Fund Receipts and Disbursements

These three blog posts all state that gifts given to employees are generally taxable income reportable on Form W-2. The exception to this statement is the employee/church member gift that is truly benevolent, not disguised compensation.

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