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Payroll taxes (Social Security, Medicare) on love gifts to pastor.

by Tom
(Grants Pass, Oregon)

If a church receives a (tax deductible) love gift for the pastor who is an employee of the church, does the gift create a tax liability to the church for Social Security and Medicare taxes?

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Payroll taxes on love gifts to pastor. . .
by: Lewis in NC

Church revenue received and designated as a love gift to the pastor must have Social Security and Medicare taxes paid by someone at some point. Generally this is the responsibility of the pastor when he/she pays self-employment taxes quarterly.

However, the church has the option of paying these taxes for the pastor if the people agree, but then the amount of taxes paid must also be listed as taxable income along with the "love gift" in Box 1 of the pastor's W-2 form for the year received.

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