April 16, 2015

Church Pays for Camp Fee - Is it Taxable?

Question:

Our church pays 100% of registration fees for our pastor staff's children to attend youth camp in the summer. The children of the staff do not have to complete an application to get the full registration scholarship. Staff children are responsible for paying their transportation fee. Would the cost of the camp registration be considered a taxable fringe benefit to the pastor? 

Answer:

Tax-free fringe benefits are so classified based on statutory authority. To our knowledge, there is no statutory authority on this benefit based to be nontaxable.

While the benefit is certainly generous and most likely appreciated by the staff families, the policy's current state leads to taxable income.

If staff members are receiving this benefit similar to other families of the church, however, it may be possible for them to enjoy tax-free assistance. For example, the church could establish a scholarship fund to sponsor children and teens of the church or local community to attend summer camp. Donations could be solicited from the membership and a proper policy could be applied.

2 comments:

  1. Is the fee taxable to the church employee (parent of camper) and would it go on a W2 or 1099? Would this same situation apply in the case of a church paying for a retreat for the spouse of an employee? (The spouse feels they are obligated to attend even though it has never been expressed as mandatory attendance).

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  2. Thank you, Adrienne, for your questions.

    1. The taxable benefit should be reported in the same way the individual's taxable compensation is reported. Presumably, all employees are receiving a Form W-2.

    2. Regarding spousal benefits, please see the following blog post: http://ministrycpa.blogspot.com/2011/09/expenses-for-wife-attending-conference.html.

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