Jump directly to the Content

Q&A: Is Benevolence for a Church Employee Taxable?

Important information to address this common tax question.

Last Reviewed: November 15, 2021
Q&A: Is Benevolence for a Church Employee Taxable?
Image: gregory_lee | Getty

Can a church give a cash benevolence gift to an employee? And is it taxable income?

Yes and yes.

Yes, a church can give a benevolence gifts to an exmployee. And, yes, it is taxable. The Internal Revenue Code requires all benevolence payments provided to employees be taxed. The church must add the amount of the benevolent payments to the employee's Form W-2, and if nonclergy, withhold all payroll taxes like the payment was wages. It makes no difference if the payment is direct or indirect, like to the employee's doctor.

As a result, "love offerings," pastoral appreciation gifts, Christmas gifts, anniversary gifts, and birthday gifts that flow from the church to its employees are always taxable. Even retirement gifts are taxable to the recipient. No exceptions to this rule exist.

If the church pays a benevolence payment to a "control person," then the tax consequences ...

Join now to access this member-only content

Become a Member

Already a member? for full access.

Related Topics:
Posted:
  • July 19, 2012
  • Last Reviewed: November 15, 2021

Related ResourcesVisit Store

Sample Compensation Report
Sample Compensation Report
A ChurchSalary.com Sample Report for Determining Fair Compensation
2022 Church & Clergy Tax Guide
2022 Church & Clergy Tax Guide
Support your ministry with the most authoritative and comprehensive, year-round tax resource.
Charitable Contributions Tax Reminder 2021
Charitable Contributions Tax Reminder 2021
Encourage giving by informing your donors about tax deductions they could claim.
Benevolence Fund Basics
Benevolence Fund Basics
Help your church develop a tax-compliant benevolence ministry.