Any gifts paid by employers to their employees are considered taxable income and must be reported together with other earnings on Forms 941 and W-2. The only exception relates to gifts of tangible personal property valued less than $25. Accordingly, the typical Christmas bonus collection received by many congregations and given to their employees represent fully taxable compensation. Of course, as participants in a church-sponsored collection, donors may write off their contributions as tax-deductible donations. On the other hand, personal gifts from a member to a minister are neither taxable to the minister, nor deductible by the member.

This information is provided as a service of MinistryCPA.org to ministers and Christian ministries. Please contact us or your personal professional advisor to determine how this information may apply to your own situation.