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Love Offerings Guidelines

Love offerings (gifts) are complex issues for church administrators.

Part of the problem lies in the fact that the IRS does not spell out exactly how churches are supposed to acknowledge and handle them.


First of all let me clarify an important point...you can give love offerings (gifts) to anyone you please. The debate is in whether that gift is taxable to the recipient and tax deductible to the donor.

We do have the following IRS court cases that lay a foundation of guidelines for determining when a "gift" is considered nontaxable to the recipient and nondeductible to the donor:

Duberstein and Bogardus, both Supreme Court decisions; Banks v. Comm, 62 T.C.M. 1611; and an 8th Circuit case, Goodwin v. U.S. 67 F.3d 149.

From the preceding cases we find the following guidelines for nontaxable "gifts":

  1. It cannot be for a service performed
  2. Must be spontaneous in nature
  3. Cannot be solicited
  4. Cannot be a tax deduction for the donor

Note pertaining to guideline number 1 above: The IRS told a pastor that the love offerings given to him by members of the church were taxable...because when a love offering is given to a minister by a church member because the church member is motivated by his or her leadership or services as a minister, then that love offering is not a gift, but rather compensation that is taxable. The tax court ruled that even if the members wanted him to receive it as a gift, it cannot be ruled as a gift because of his relationship with the members as a minister of the gospel. - Paul Rivera: StartChurch.com.

Here is another one of Paul's posts that is very interesting regarding love offerings: Love Offerings--When They are Taxable and When They are Not

Why should this matter to your church? Well...one of the number one issues that hurt churches in an IRS audit is improperly paying employees or non employees.

Those weekly or monthly love offerings you give your church musicians or pastors could potentially turn into a financial nightmare for them and your church...because the gifts could be considered payment for a service performed and it definitely is not a spontaneous gift.

So you would need to either include these amounts in their W-2s...or...if over $600 paid annually to non employees...send 1099s to these recipients.

I know there will be many of you that disagree with me and as I have stated several times....never take what you read on the internet at face value.

Do your own research and for the sake of your church and staff....educate yourself on the proper documentation and handling of love offerings.

On the second page of this very interesting article “Love Gift Rules”, Frank Sommerville, JD, CPA states, “All love gifts are taxable to the employee even if it meets the requirements to be a benevolent gift .”

However, Dan Busby, CPA, states, Love offerings (gifts) to staff members from church or nonprofit funds are taxable....unless they meet one of the following exceptions:

  • De minimis gifts...gifts less than $25 in value. (Cash, gift cards, or other cash equivalents are not de minimis gifts, regardless of how small the value)
  • Employee achievement awards...requires a written, nondiscriminatory award program, which provides awards either upon attaining longevity goals or safety standards and meets other requirements for type of gift and limits on amounts.
  • Staff member is a church attendee...requires careful documentation to ensure that the employee would have received a benevolence payment, and in the same amount, if the individual had not been a staff member. *Note: Many churches adopt policies prohibiting the payment of benevolence funds to employees.

    • Another excerpt taken from Dan Busby's book: Zondervan 2011 Church and Nonprofit Tax and Financial Guide ...

    "Gifts made through an organization to an individual, where the donor has specified by name, the identity of the person who is to receive the gift, generally are NOT tax-deductible.

    Charitable gift receipts should not be issued to a donor for personal gifts, and the organization should affirmatively advise donors that the gifts are NOT tax-deductible."

    Comment Section

    Personal Note: I have closed the question and answer portion of my site. With my husband’s illness, my “regular” 40hr a week job, building and maintaining three web sites, and my volunteer work at my church, I am overwhelmed. I had to let something go. My God comes first, my precious husband and children come second, and with my husband being on my insurance at work...it comes third. So that leaves my web sites and the question and answers take a very big portion of my time. So it had to be the first to go.

    However...you can look at the submissions below and see if someone has already answered your particular question or maybe you would like to take a minute to comment on one of the questions and comments below. Your opinions and comments are very valuable to me...so thank you in advance for contributing your comments.

    You can also use this search button to look for the answers to your particular question:

    Custom Search

    Also please read the disclaimer at located at the bottom of these comments and realize the comments below are for general information purposes only and do not constitute legal or other professional advice on any subject matter. Please contact a tax professional to discuss your particular situation before relying on any information given on this site.

    Categories




    Archive of Love Offering Questions (& Answers)

    Click below to see contributions from other church administrators to this page...

    (Click on the read or post comment on the bottom of the question to see the answers and/or add your own comments or answers!)

    Gift to traveling Pastor  starstarstarstarstar
    If our church has a Pastor who is not of our church stop on his way through town, we give that person about $100 for travel expenses. They did not come ...

    SHOULD WE BE PAYING THE ELDERS IN OUR CHURCH?  starstarstarstarstar
    The Elder of our church we give him $500 a month from our Gas checks that comes in. We write him a check out of the General Fund. Is this legal and should ...

    Gift to a church member?   starstarstarstarstar
    I was asked to do some help around the church and the pastor wanted to pay me.

    I am retired and did not want to mess that up.

    Can I volunteer ...

    Guest Speaker Love Offering  starstarstarstarstar
    Giving a love offering to a guest speaker from India. The church members make their checks out to our church for the deduction, but we as the church are ...

    Love Offering/Taxable?  starstarstarstarstar
    If people want to donate to the Pastor, should the checks be written to the Church and then the Church write a check to the Pastor?


    Gift to Church Member  starstarstarstarstar
    If a church gives a gift (one-time) to a member of the church for need based purposes, is that taxable? If the member is a deacon or another type of leader ...

    Are Gift Cards Taxable?  starstarstarstarstar
    We do not have an ordained minister but a member of the congregation that preaches the sermons every week and we feel he serves as our pastor. He does ...

    Pastoral Gifts  starstarstarstarstar
    Once a month our ministry has a set date to give our pastor a monetary gift. If the amount is not a certain number, an additional check is written out ...

    Guest Speaker Receiving Love Offerings Only  starstarstarstarstar
    Question regarding guest speakers and love offerings:

    I am Treasurer of our Church. Our Board has agreed that this year Guest Speakers would be paid ...

    Speaker Fees, Love Offerings  starstarstarstarstar
    When we have a speaker come and pay him a "fee," plus give him a love offering (for which the church members expect a tax-donation) - are we supposed to ...

    Pastor's Love Offerings and Reimbursements  starstarstarstarstar
    Processing love offerings and pastor reimbursments.

    Processing Love Offerings  starstarstarstarstar
    We've had a question arise concerning love offerings. I understand the basic rationale for the offering being non-deductible for the giver, but also not ...

    Gift to church members and employees  starstarstarstarstar
    The church wrote checks to their church members who volunteers to help the church during the year about $1,000 each and $1,000 to their employee.

    Does ...

    If pastor receives designated contributions thru payroll is it tax deductible to the donor?  starstarstarstarstar
    We have a pastor who has officially resigned and moved. Some of the congregation has pledged to donate money weekly through the end of 12/31/10 as part ...

    Love Offering or Guest Minister Honoriaum  starstarstarstar
    When a church has a visiting pastor or evangelist preach and an offering is taking up, is that recorded in the books as a "love offering" or "guest minister'...

    Love Offerings for Ministers in Pastor's Absence  starstarstarstar
    Can I as a pastor issue my ministers who minister in my absence a love offering?

    Answer

    Yes you can; however, it will be taxable income for them ...

    Love Offering and Taxes  starstarstar
    If a love offering is given to our Pastor from our church account.... how can we report this as non-taxable gift or can we? Should our Pastor have to ...

    Love Offering  Not rated yet
    Does a church group have to collect w-9 info & prepare 1099 forms for recepients of love gifts or is the fellowship group exempt from these IRS stipulations ...

    IRS Reporting question  Not rated yet
    I have just started the financial reporting at a church. The pastor receives a salary and housing allowance that is reported on the W-2. Taxes are reported ...

    HOW CAN YOU GIVE A MINISTER A PERSONAL LOAN  Not rated yet
    WHAT SUBSTANTIATES A CASH GIFT AND WHAT IS THE LARGEST AMOUNT GIVEN.

    vickey's reply

    See this post and its comments.

    Do I Have to Pay Tax on a Cash Gift?   Not rated yet
    To honor my 25 years working at church as a secretary, the congregation secretly took up a collection to be used to pay for a trip overseas with the pastor ...

    Regular Love Offerings Taxable ?  Not rated yet
    We are an independent reformed church, our clergy do not receive a paycheck of any kind, they work for the love of God. However, by general consensus we ...

    Monetary gift to pastor  Not rated yet
    Our church made a significant profit on sale of asset and wants to give a portion of the proceeds as a gift to our pastor to help him with his financial ...

    Is Benevolent Offering to the members taxable to them?  Not rated yet
    My church gives $200 in a monthly basis to needed members. Do I as the treasurer ask the member to file a W-9 so that at the end of the year I issue that ...

    Love offering  Not rated yet
    Can a church proclaim a love offering as long as church supported?

    Answer

    You can take up and give love offerings any time you wish...just remember....

    What is sent to IRS from the church when 1099's given to pastors who only receive love gifts  Not rated yet
    Question regarding 1099 and love gifts:

    After reading through several links on your website, I am understanding that our church needs to give our pastor ...

    LOVE OFFERING FOR PASTOR  Not rated yet
    WE HAVE A PASTOR THAT IS ON SS DISABILITY HE ONLY PASTORS ON SUNDAY AND CAN NOT GO VISITING DOOR TO DOOR DUE TO HIS DISABILITY - CAN WE PAY HIM A LOVE ...

    Love Offering Question  Not rated yet
    Are love offerings taxable?

    Answer

    Usually. See this page for love offering guidelines .

    Vickey

    Funds Received From Anniversary  Not rated yet
    I'm not sure how to handle the funds received in our Pastor's Anniversary. Our pastor does not receive a salary and so the monies received during the Anniversary ...

    Are Love Offerings Taxed?  Not rated yet
    Is a minister required to pay SE tax on love offerings?

    vickey's reply

    Yes. Most love offerings are considered taxable to ministers, so you would ...

    Pastor Pay Label on Church Financial Report  Not rated yet
    Question regarding pastor's pay:

    First and foremost I would like to thank you for your website and all the great information and updates you send out....

    Love Offering For Visiting Songwriter  Not rated yet
    Question regarding a love offering for a visiting songwriter:

    We are having a concert in which a songwriter (not an employee, or having any affiliation ...

    Monthly Love Offering  Not rated yet
    Is it legal for a pastor to receive a monthly love offering and a salary?

    Vickey's Reply

    It's perfectly legal. It is also most probably taxable ...



    The comments above are for general information purposes only and do not constitute legal or other professional advice on any subject matter. See full disclaimer.

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