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One common area of confusion for Clergy is the taxability of gifts.

The US tax code explains that personal gifts are exempt from taxation (up to an annual dollar limit). Normal gift-giving out of affection from one individual to another is usually not taxable. If it were taxable, everyone would need to file a tax form every time they gave a birthday gift!

The problem occurs when ministers attempt to apply this same rule to congregational giving. Using the term “love gifts” or “love offerings”, the Church will collect donations from members of the congregation with the intention of giving it to the pastor. Unfortunately, since the Church is organizing the gift-giving, it becomes impossible to establish that the gift is only for affection and not as compensation for services. In most cases, collective “love gifts” or any other gifts from the Church should be treated as taxable income.

Do you have questions about whether your compensation should count as taxable income? Clergy Financial Resources discusses income as part of our 1040 review. If you are looking to have your 1040 prepared, visit our website at https://www.clergytaxnet.com/services/clergy-tax-preparation/ for more details.

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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: (763) 425-8778 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com

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