gift from church to individual

[Marie]

Church has extra money and feels very blessed and wants to give money to several individuals who need help. Does this consitute taxable income to the individuals? Do amounts have to stay under the $13,000 gift exclusion? Or does it make a difference?

[TAXBILLY]

Gifts are not taxable to the recipient.

taxbilly

[Marie]

Gifts in any amount? Could the church give $25000 to an individual? $13000 limit doesn't enter in? To clairify, individual does not work for or at church,.

[BulldogTom]

The church can give all it wants to any person in any amount. Not taxable to the recipient.

HOWEVER, they should be very careful that the recipient is not a pastor or staff member of the church, as any gift to an employee is presumed to be taxable wages unless it falls under the de minimus exception.

Hope this helps.

Tom

Lodi, CA

[Marie]

Thanks. I understand that employee/wage thing, and the recepients are not employees or workers.

[Margaret CPA in OH]

Another caution is to be sure that the money has not been donated for a charitable contribution but specified for an individual to receive. The governing body must have full control over the funds. If a particular donor wrote on a check something like "for John Smith," I would be cautious.

[kcjenkins]

Helping people is mostly what churches do. And it;s not income to the recipient, nor limited in amount. As long as the church is giving the money, and the recipients are not employees or related to employees, simply people the church has identified as people in need, there are no restrictions.

[Lion EA]

Doesn't sound like this is the case if church has money sitting around to distribute, but churches do have to avoid having a substantial portion of their income disbursed to one person/family/entity.

[Wkc]

What if the person is the former pastor of the church but terminated, therefore, no longer an employee can the gift be given

[Pacun]

It really depends on the intent of the person in charge of the church. Is the intent to help the ex-pastor because he was a pastor. Is there another person in a similar situation of the pastor and that person is also receiving the same amount as the ex-pastor?  In other words, if the receiving the money had not been the pastor in the past, would he/she be receiving that money? Also, an ex-pastor can easily and effectively represent the church in future engagements and that will leave a prepayment aroma in this gift.

Another smelly thing to consider is when was the pastor terminated... 10 year ago... no problem, within a year... he still smells as a pastor.

[DANRVAN]

On 12/31/2020 at 4:23 PM, Wkc said:

former pastor of the church but terminated, therefore, no longer an employee

It depends on the purpose of the payment.  There is a lot of case law in regards to gifts to employees vs compensation.

Since the pastor is a former employee, there should be a clear line as to whether the payment was compensation for services; or an act of charity.  

As Pacun mentioned, the intend of the church is the key.  The payment could be classified as compensation If it was an enticement for future services or if he had not been fully compensated in the past.  The reason for his termination could shed some light on the case.

So for example, if he had fallen upon hard times, the church could make a gift out of concern for his welfare.  In defining gifts, courts have used terms like  affection, pity, generosity....