Are Church Staff Christmas Gifts Taxable?

As we head towards the end of the year it’s time to start thinking about the Holidays and fun times had by all. This is the time of year that we spend with family and friends and often includes staff parties and those fun times to celebrate and thank your staff for a productive year.iStock_000010733257XSmall

It’s also that time of year to start thinking about Christmas bonuses and gifts for our faithful staff members.

Before you start your planning, here are a few tips to keep in mind BEFORE you setup those gifts.

– Any cash gifts of any amount are taxable income to the employee and must be reported on their W-2.

– Gift cards for local restaurants, stores, grocery stores, etc. to an employee do have a measurable cash equivalent and therefore must be reported on a W-2.

– Either of the above gifts to a non-employee volunteer need not be reported on a W-2 since they are not employees and as long as the person has not received $600 or above for the year they would not need to be issued a 1099-MISC.

– Gifts can be given to employees and would not be taxable. For instance, you can give gift baskets, books, etc. and the item’s value would not be taxable. This is considered a Nontaxable de minims fringe benefit.

– Employees can be taken out to a staff dinner paid for by the church or organization. The IRS provides “group meals or picnics for employees and their guests” as a nontaxable de minims fringe benefit.

Being attentive to these items will not only keep your organization above reproach but also further bless your employees by not putting them into any positions to be surprised at tax time.

If you have any questions or would like to talk more about specific examples, please Contact Us and let us know.


Richard Hammer, J.D., LL.M, CPA author of Church and Clergy Tax Guide.

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