Our church has three pastors on staff. We occasionally raise “love offerings” to express our appreciation to them. Our church board determines the distribution of the offering between the pastors. We report these gifts on Form W-2 of the respective pastors. Are we handling these offerings correctly?
When an occasional love offering is raised for more than one staff person (e.g., when an offering is received for a Christmas gift or for a pastor’s appreciation gift and the funds will be distributed to more than one staff member), if the church leadership determines the recipients and the allocation of the offering between staff members, donations to the love offering are generally tax-deductible. The payment of the love offering is taxable and should be reported on Form W-2.
Dan Busby is a certified public accountant, president of the Evangelical Council for Financial Accountability (ECFA), and the author of the Zondervan Clergy Tax & Financial Guide.