Gift Card Taxable as Compensation

Question:

Our church recently decided to provide a monthly gift card to one of our members who cleans the church on a weekly basis for no compensation. Does this monthly gift need to be reported as income to the IRS?

Answer:

This should be reported as taxable compensation. Because the member is performing services for the church, any non-cash payment should be reported as compensation for those services. While the gift card is not technically cash, it is still taxable as an item of value provided to the member in exchange for the work performed. According to IRS Pub. 525, "In most cases, you must include in gross income everything you receive in payment for personal services. In addition to wages, salaries, commissions, fees, and tips, this includes other forms of compensation such as fringe benefits and stock options."

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MinistryCPA - Corey A. Pfaffe, CPA, LLC

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