What is taxable compensation for a pastor?

by Kathy Butler
(Corning, Arkansas)

Our pastor does not receive a salary and does not work a job outside of the church. The church does give him love gifts throughout the year for birthdays, Christmas & Pastor appreciation month. Those are just love gifts. Not compensation for anything. So would we still give him a 1099? Since it is not paying him for anything we are just giving him monetary love gifts on those days.

Comments for What is taxable compensation for a pastor?

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Oct 22, 2015
Pastor's love gifts
by: D Fry

You say it's not compensation, but it really is. Why else would you be giving it to him? Would you give it if he didn't do anything for the church?
More importantly, if the church solicits it for him, then the IRS views it as taxable compensation, and you must account for it on a form 1099, and he must pay tax on it. Read more on this site about love offerings and church responsibilities.

Oct 23, 2015
What is taxable?
by: Lewis in NC

Well stated D. Fry.

Oct 24, 2015
Thank you
by: Kathy Butler

Thank you D Fry and Lewis for your help and insight. I wanted to make sure we were doing it correctly and we are. Those questions were asked by a couple of people at our last business meeting so I thought I would put the questions here. Yes. We are giving him a 1099 each year. Thank you again.

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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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