Many Churches and other employers like to give to their employees around the holidays. In most cases these gifts are taxable, but like almost all tax laws there are a few exceptions.
According to IRS Publication 525, “If your employer gives you a turkey, ham, or other item of nominal value at Christmas or other holidays, don’t include the value of the gift in your income. However, if your employer gives you cash, a gift certificate, or a similar item that you can easily exchange for cash, you include the value of that gift as extra salary or wages regardless of the amount involved.”
The easy rule to remember is that anything easily converted into cash must be considered taxable income, while “De Minimis” or “Minimal” benefits can be excluded. “De Minimis” means that cost is so small that it would be unreasonable or difficult for the employer to track. For example, providing coffee to your employees one day would be a “De Minimis” benefit. The employer isn’t going to track how much coffee each individual employee drank.
Do you have questions about what is and what isn’t considered a taxable benefit? Visit our website at https://www.clergyfinancial.com/resources/proadvisor/ for more information about scheduling a Pro Advisor meeting today!
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.
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