Though they may be called “gifts” or “tokens of appreciation”, any money or gifts you receive for performing services like baptisms, weddings or funerals are actually considered taxable income in the eyes of the IRS and should be reported on your tax return.
If you don’t want the additional income or tax that results from these gifts, you can either decline the gift or instruct the giver to give the money directly to a church or charity. Do not deposit the money into your bank account and then donate on their behalf, since IRS will see that as having “constructively received” the income.
Receiving income from honoraria like baptisms, weddings and funerals generates self-employment taxes, which many ministers do not anticipate on their tax return. Clergy Financial Resources works with our 1040 clients to anticipate these taxes and to calculate the necessary estimated payments to cover them during the following tax year. For more information about our 1040 tax service, visit our website at https://www.clergyfinancial.com/services/clergy-tax-preparation/.
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (888) 421-0101
Fax: (888) 876-5101