Giving Gifts to Non-Employees

by Dave
(Jefferson County, CO)

Our small start-up church decided to be served by two part-time pastors whose only responsibility is to preach on Sundays. They set their own schedule between themselves to divide up the weeks they serve. As such we feel comfortable considering them contractors and reporting their compensation via 1099s.

The younger such pastor is also trying to start his own small church of young families. That church cannot pay him adequately and the pastor and his wife work multiple other jobs to make ends meet. Our church is considering benevolence gifts to help them.

Do such gifts have to be included on his 1099 or not? Does it matter if the gift is one time versus regular? Does such assistance look to the IRS as too much to one individual and threaten our non-profit status?


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by: Anonymous in NC

It appears to this writer that you are hiring two part-time pastors to share in limited pastoral duties of your church, and W-2's would be the proper route to take in reporting their income. Yes, in complying with the tax laws the church would report the gifts of extra money to these employees as regular income to them. . .This would be the case on whichever form you use to report their income.

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