Churches sometimes collect “love offerings” from the congregation for a pastor, visiting minister, volunteer, or staff member in recognition of services rendered. So, if a church takes up a love offering for one of its service providers, is it reportable as income on Form W-2. If the recipient is not a church employee, the income should be reported on a Form 1099-MISC if $600 or more was paid out.
The courts have outlined four requirements for a “gift” to be considered nontaxable to the recipient.
1. cannot be for a service performed
2. must be spontaneous in nature
3. cannot be solicited
4. cannot be a tax deduction for the donor
Love offerings made directly from a donor to a minister or church employee are generally not taxable to the recipient. These are considered personal gifts and are not deductible as a charitable contribution by the donor. If the gift exceeds the annual gift limits ($15,000 per donor in 2018), the donor must file a gift tax return. However, if the church takes up a collection during the service specifically to benefit the Pastor or church employees, the love offering is taxable income to the recipient and must be reported on Form W-2 or 1099-MISC.
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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