FCA - Processing Gifts

Published: Wed, 09/22/21

FreeChurchAccounting.com

Accounting for Churches and Nonprofits

Sept 2021 Edition

Gifts for Appreciation and the Holidays!

I know I harp on this quite often, but since next month is Pastor Appreciation month and the next 2 months are when a lot of employers hand out bonuses and Christmas gifts... I thought it was a good time to remind you on the tax consequences of those "gifts".

First of all, let me stress the importance of processing those employee gifts and bonuses through your payroll as those gift cards and cash payments are usually considered taxable income and MUST be reported in Box 1 of their W-2s! The gifts to non-ministers are also subject to payroll taxes.

Your accountant or bookkeeper will be upset and may charge you additional fees if they have to manually enter it "after the fact" and "gross it up" to cover the payroll taxes.

One more point I need to stress is that appreciation gifts and offerings and love offerings ARE considered taxable income by the IRS and should be treated accordingly.

See additional instructions on how to handle gifts for staff and volunteers ...

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See more details on the "Accountant Beside You" website...

Pastor Appreciation Ideas

Next month (October) is a month many churches set aside time to honor their Pastors for their hard work, sacrificial dedication and multiple blessings provided by these special people.

See this site for some pastor appreciation ideas and free resources...

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