HOLIDAY GIFTS TRIGGER TAXES
Should the gifts you give to your pastor and church employees be reported as income to them?
Oftentimes, the answer is YES.
Gift cards are reportable income.Cash is a reportable income.A church’s gift to its pastor is reportable income.
Reportable income means that it must be included as compensation on the Form W-2.
SO WHAT CAN YOU DO?
An individual member of a congregation can give his or her pastor a personal gift without triggering a taxable situation.
An employer can give his or her employees small, low-value gifts, infrequently, that can be excluded from income.
During the holidays we like to give the people in our lives a tangible message of our love and respect. However, make sure that the gift does not have a tax bite when the holiday season is over.
These rules apply to all gifts throughout the year. The above examples are for illustration only. Consult your tax professional for your individual tax situation, preferably before giving the gift.