Are Pastor Appreciation Gifts Taxable by the IRS?

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We all know that pastors don’t serve in their position for the money.

(well most anyways, but I won’t touch that debate today)

Most pastors serve long, stressful hours in an often thankless job. Much of their work happens behind the scenes and away from the public eye and by its very nature often goes unrecognized.

The fact of the matter though is that pastors deserve to be appreciated.

For many of us, that appreciation is shown through gifts which is great and appreciated. However, are Pastor Appreciation Gifts Taxable by the IRS? Here are some quick tips on how to determine.

Pastor Appreciation Gift Tip #1

Since the pastor will most likely be considered an employee, any non-reimbursement payments to them will be considered taxable income. This would include cash, checks or gift cards. Monies designated by church members directly for the pastor as well may not classified as a tax deductible donation either. See our post on How To Handle Pastor Appreciation Gifts for more info.

Pastor Appreciation Gift Tip #2

Gift Cards are always taxable to the pastor. Regardless of the amount, since gift card has a defined cash equivilent, they will be taxable as a gift to the pastor. Many churches will seek this option to avoid tax, but if ever audited they will be surprised.

Pastor Appreciation Gift Tip #3

There are gifts that would be considered non-taxable. These may include a gift basket of items, letters, cards, or other items that would be considered a de minimis fringe benefit. The IRS Website has some specific information on De Minimis gifts and make it pretty clear on what does and does not qualify. Basically, it cannot be disguised as wages or be given in any way to avoid taxing, it must be infrequent and the value can be determined as “administratively impractical” to account for.

To conclude, your pastor deserves to be appreciated but keep in mind that there are other considerations that need to be taken into account before you determine your pastor appreciation gift. Appreciate your pastor, but do so in a way that blesses him and let’s him know that you are thankful for the time and effort he puts in.

Disclaimer: The information presented in our blog is intended to provide general information for your church.  Because your situation may be fact dependent, please reach out to us or a local church expert for guidance on any specific situation that may pertain to your ministry.

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