Jump directly to the Content Jump directly to the content

Q&A: Can Church Employees Receive Tax-Free Assistance for COVID-Related Hardships?

Section 139 of the Internal Revenue Code allows you to offer nontaxable financial help for expenses directly related to the coronavirus.

Q&A: Can Church Employees Receive Tax-Free Assistance for COVID-Related Hardships?
Image: Kiattisak Lamchan / EyeEm | Getty

Our church’s employees have experienced extreme financial hardships because of the coronavirus pandemic. Is it possible to offer them financial assistance without having to report these “benevolent funds” on their W-2s?

A church may not provide general benevolence to employees on a tax-free basis. However, Section 139 of the Internal Revenue Code allows employers to provide disaster assistance on a tax-free basis.

In March of last year, President Trump declared the COVID-19 outbreak a national disaster. If an employer has adopted a Section 139 Disaster Relief Plan, the employer may assist its employees for unusual expenses directly related to them having COVID.

For example, the employer may pay expenses related to their COVID infection or caused by their COVID infection. Expenses could include medical expenses related to the COVID infection not covered by insurance, such as ...

Join now to access this member-only content

Become a Member

Already a member? for full access.

Related Topics:
Posted:
  • January 5, 2021

Related ResourcesVisit Store

CARES Act and CAA Table
CARES Act and CAA Table
A Side-By-Side Look at COVID-19 Economic Relief
Church Compensation - Second Edition
Church Compensation - Second Edition
From Strategic Plan to Compliance
Benevolence Fund Basics
Benevolence Fund Basics
Help your church develop a tax-compliant benevolence ministry.
2021 Church & Clergy Tax Guide (Book)
2021 Church & Clergy Tax Guide (Book)
The most comprehensive and authoritative tax guide available.