Gifts for Volunteers

by Lolli

Need clarification please! Confusion over employee or not?

If we were to give the children's church leader and the choir director (both volunteers who coordinate the service) a $500 check for their time and service... they are now considered an employee?

So, we would withhold taxes and then send a w2 at end of the year? Or if they are considered non-employee, only send a 1099 if over $600.??

Please advise.

Comments for Gifts for Volunteers

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Jan 01, 2020
Volunteer Appreciation Gifts
by: Vickey

You are opening up a huge can of worms here =)

The DOL (Department of Labor) uses the FLSA (Fair Labor Standards Act) to define who could be considered an employee or a volunteer.

Section 553.106(f) of FLSA regulations gives us some guidelines that outline what kind of payments could possibly jeopardize a volunteer's status.

In my article on " Staff Gifts" (go to PAYROLL under "RESOURCES" in my top navigation bar and scroll down to "STAFF GIFTS") under the Volunteer section ... I provide links to that reg and some articles that may help you in your determination of whether those $500 "gifts" could turn your volunteers into employees.

However, "experts" vary on the amount of a gift that could potentially turn your volunteers into employees that would result in you withholding and matching FICA AND following DOL regulations.

Some say "if it walks like a duck and quacks like a duck ... it's probably a duck =) Meaning ... if your "volunteer" fits the description of a employee and you "pay" them "FOR THEIR SERVICES" more than $100 in a calendar year (following IRS Pub 15-A guidelines) ... you should withhold FICA and treat the "gift" as compensation.

BUT many of them cite the "excess of $500" example as the amount that the "Volunteer Protection Act" outlines as losing volunteer status.

I give the link to 2 such articles in my page on "Staff Gifts" mentioned above.

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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.

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