severance package for non-employee

We've had a church plant discontinue operations. We are considering some type of financial package for their head pastor. He is not an employee of our church entity. Is there anyway to give him a severance package, gift, or other form of payment without it being totally taxable?

Comments for severance package for non-employee

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Sep 19, 2014
by: D Fry

If you are giving severance, then it seems to me that is in contemplation of services rendered would most likely be taxable, especially if paid from funds that were given as tax - deductible. If you want to give a gift that would not be taxable, it would have to come from funds that were not given a tax deduction. You cannot give out funds that are non-taxable from funds received as tax deductible.
And consider the morality factor: we may not like to pay taxes, but it is our legal - and therefore moral - obligation to do so. Should we as members of a Christian community seek to skirt the law? Christ's own words tell us to "render unto Caesar what is Caesar's."
You could structure any payment to include the taxes that would be due if you wanted to make sure he received a certain amount.

Sep 19, 2014
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by: Vickey

I agree with D. Fry. I don't see anyway to do it that it would not be taxable, but check with a tax professional. You want everything done in order...especially considering the circumstances.

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