Congregational gifts to the Pastor. Add to W-2 or not?

[Jack from Ohio]

Church board established as a fund, "Pastor Christmas gifts" allowing the congregation to give to the fund, and claim the gift as charitable donations. At Christmas, these funds are given to him.

The Governing board, each year, gives the Pastor a Christmas bonus, this is added to his W-2 as earned income and given to him with the congregational gifts.

Question: Are the gifts from the congregation required to be added to the Pastor's W-2 as well?

My feeling is that they represent gifts, and should not be added, but I wish for other opinions and or cites relating to this.

[Lynn EA USTCP in Louisiana]

These are W2 income to the pastor. See Richard Hammar's Church & Clergy Tax Guide for further reference;

Lynn Jacobs, EA, NP

Enrolled Agent

Civil Law Notary Public

Kenner, La.

[PapaJoe]

I would think that, technically, the gifts to the pastor through the fund are gifts and not charitable contributions, so the congregation members would not be entitled to a deduction. There would be no need to add these gifts to the pastor's W-2.

[JohnH]

If the church members get a tax deduciton for the gitts, it is definitely taxable income to the pastor(s).

http://www.ecfa.org/...ed-for-a-Pastor

http://www.irs.gov/pub/irs-wd/09-0038.pdf

[Jack from Ohio]

Ok, I read the articles. If the Governing Board sets up the fund with a specific person/event to be supported, is that not TOTAL control by the Governing Board? Examples... John Doe whose house burned down, but is a member of the church. Relief to tornado victims in the town. Haiti. Operation Christmas Child.

Our church has three pastors on staff. We occasionally raise love offerings to "bless" the pastors by raising love offerings. Our church board determines the distribution of the offering between the pastors. We report the love offerings on the Form W-2 of the respective pastors. Are we handling these offerings correctly?

When an occasional love offering is raised for more than one staff person (e.g., when an offering is received for a Christmas gift or for a Pastor’s Appreciation gift and the funds will be distributed to more than one staff member), if the church leadership determines the recipients and the allocation of the offering between staff members, donations to the love offering are generally tax deductible. The payment of the love offering is taxable and should be reported on Form W-2.

Am I missing something here?

[Lion EA]

Taxable on W-2.

[MAMalody]

It looks like there are two basic issues here. (1) Gifts to the pastor from the churches general fund and gifts made to the church to be given to the pastor. In both these cases, it would be taxable income to the pastor and deductible to the giver. (2) Gifts that are given directly to the pastor and gifts given to the pastor though the church (the checks are collected by the church but made out to the pastor). In this case, the gifts may be nontaxable and nondeductible.

These two positions are nominally addressed by a number of court cases which can be provided upon request. This information, as pointed out earlier, is generally contained in Richard Hammer's tax book.