"Gift" from a Church Member to a Church Employee

Church member gifted a church employee $10,000. Check was made payable to the church. Is this a tax deduction for the member? and is the employee who receives the check I make payable to him responsible for tax? Should I be processing this thru payroll? How do I as the bookkeeper handle this transaction?

Comments for "Gift" from a Church Member to a Church Employee

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May 27, 2015

Gift Designated for Church Employee
by: MarcusNtexas

This would not be unlike a grandparent making a "charitable" gift to a university with directions that it be used as a "scholarship" for one of my grandchildren. Such "gifts" are not allowed by universities and it is probably illegal for the donor to count it as a charitable deduction, and as far as I know, reputable universities would not accept a gift that was designated for the donors grandchild.

Seems to me that the same general rule applies in this case. I realize that this could be a situation where the employee is in need of financial help and the church member wishes to make an anonymous gift and does not want to give the employee a personal check or cash. It is possible that as bookkeeper you could write a check to the employee as a "gift" from a member wishing to remain anonymous; however, the member should be advised that such a gift cannot be treated as a charitable gift to the church. In this case, it would not be necessary to run it through the payroll system since it is within the limits for gifts under IRS rules and regulations; HOWEVER, as bookkeeper, you should have a confidential discussion with the pastor and with other members of the church's stewardship/budget committee before acting. You will need their backing when you inform the church member that his / her gift cannot be considered a charitable contribution for tax purposes.

Feb 09, 2017

How I would handle this situation....
by: Anonymous

Even though MarcusNtexas' proposed handling of the situation is doable, if it were me I would go above and beyond to make sure there is NO hint of any possible tax-deductibility of the love gift on the part of the donor.

The easiest way, in my opinion, to do that would be to kindly and diplomatically return the check to the donor, explain the risk to the church's tax-exempt status due to perceptions of impropriety, and then suggest that the donor can achieve the anonymity he/she desires in financially helping out this church employee by just buying a money order for the same amount and getting it to the employee anonymously. Case solved!

And at no risk to the church since there is no check to the church, that has to be "processed" outside payroll and outside the contributions/offerings stream.

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If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)

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