Voluntary salary reduction to a non-profit organization

by Church Treasurer
(Illinois)

Our pastor has requested that his salary be reduced by $250 per month as his "contribution or tithe" back to the church in order to reduce his taxable income. I cannot find any IRS rulings that would allow this. Your thoughts? And then if he can do this, don't we have to offer this to all employees.

vickey's reply

No. It would be better to give him the total amount and then he can give his tithes out of it. Even if you do as suggested, you would probably still have to count the total plus the tithes as income.

See this page.

Please consult a knowledge tax professional.

Comments for Voluntary salary reduction to a non-profit organization

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Jul 23, 2020
Taxed Only on Money Actually Received
by: Anonymous

If the pastor never receives the money (as opposed to receiving it and giving it back) and he does not control where it is reallocated by the church in their budget, it is not taxable, and it certainly does not constitute "tax evasion." I have a letter to that effect on file from the IRS which addresses this very question. You are only liable for taxes on money you actually received, not on what you could have received. If, in establishing the budget, the congregation says they are willing to pay, for example, $30,000 per year, and the pastor requests that they only pay him $25,000 per year (which then becomes the budget figure they actually pay him) he pays taxes only on the $25,000. The same thing happens frequently with professional athletes who renegotiate their contracts (lower) in order to enable their team to sign other players.

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