Honorarium or Gift reporting

by Yelrab
(Winchester, VA)

Our church employed a retired pastor to assist our Regular pastor with visitations and occasionally other backup support to the full time pastor. He was employed for several years and was paid via payroll, W-2 issued, etc each year. This part time pastor retired from this position at the end of 2015.

In Feb of 2016 the church held a celebration/reception in honor of his years of service to our congregation. In addition to a physical tangible gift, the congregation had collected a small monetary gift which was also given to him.

My question is how do I handle the cash gift?

I know the IRS considers cash or cash equivalents as income and would normally be reported as such on his W-2. However, for 2016 do I issue a 1099 or W-2? His regular employment ended 2015, but he gift was given in 2016. Would the IRS consider him an employee in 2016 and be included on the Quarterly 941 and be issued a W-2 at the end of 2016? Or should he be treated under the rules of a 1099 and only need to be reported after the threshold of $600 is achieved?

As a 1099 recipient he would not need to be reported on the Quarterly 941 report.

To me this is a gray area since this was a employee for several years. At what point does the employee relationship end as far as the IRS is concerned. Would he only be considered an employee through the end of tax year 2015?

Thank you for your opinion.

Comments for Honorarium or Gift reporting

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Mar 04, 2016
Gift reporting
by: Lewis in NC

You stated that the part-time pastor retired in 2015, so to me that sounds like your official date of termination of employment (important for this legal question). So, I believe you answered your own question with the 1099 comments.

Mar 04, 2016
Reporting of gifts
by: Anonymous

Hello Yalrab. Whatever gifts/money he receives still needs to be reported since he is no longer an employee. You need to fill out a W-9 for him and a 1099 will then be issued to him from your accountant and/or whomever prepares those items for your church.

Our church has both situations here at our church. We give "salary" to the pastor, his wife, the secretary, music minister & the person who cleans since we provide all her cleaning supplies.

We then issue monetary 'gifts' on a monthly basis to the youth pastors, our maintenance man, and the S.School Director. Since those are not considered full time jobs, it is how we consider the money they are provided from the church.

At the end of the year, I submit all of that information to our payroll company who then issues the W-2's and 1099's accordingly. I hope I have answered your questions. God bless!

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