Q&A: Our Pastor Died—Can We Financially Help the Spouse?
Be aware of how the IRS views aid to employees' family members.

Q: A pastor passes away. The church wants to give the widow a small amount of monthly income for the remainder of the year. How is this gift treated from a tax standpoint?

A: It is best to treat this as taxable income in recognition of the pastor's services. Churches cannot make nontaxable "gifts" to persons, although they can distribute funds for charitable or benevolent purposes (it is unlikely that a pastor's spouse would qualify for this unless the spouse is destitute).

I provide specific guidance on employer-provided relief to employees and family members of employees on pages 407 and 408 of the 2013 Church & Clergy Tax Guide. This guidance includes the specific criteria that must be met in order for the IRS to consider assistance to be benevolence, rather than taxable income.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations

Comments

Displaying 1–2 of 2 comments

Denise

March 14, 2014  11:29am

I would love to know what options the church has to provide for a pastor's wife in the event of his death? Can they continue to pay her for his service? Can they purchase life insurance on him, and list her as a beneficiary, and if so, are the premiums taxable income to the pastor? Can they allow her to live in the parsonage for her lifetime, and is this taxable income? What other options are available for a small church that can only afford the pastor's salary and not much benefits financially? Thanks!

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Jerry

November 26, 2013  8:12am

Bill G: I would like to take a gander at your qustoien. It is tough being treated the same. Some won't/don't want to. They want their pastor on a pedestal. On the other hand I have known pastors who take pride in their people being earthy around them. I find that offensive and showing a lack of respect (for me or anyone for that matter). I think one of the things you need to do is find those who have some of the same things in common like eating out or watching movies or going to ball games. My wife and almost always eat out on Sunday and have found a family or two who are of the same mind. We almost always have a standing date and enjoy the time together. That is just one example.

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