Ministers and Taxes

Cash gifts are considered taxable income to a minister. Not sure how to solve the problem with the money coming from your mom for Christmas. Talk to your board to see if there is something they can do.

 

Our missionary agency handles family gifts differently.

When a family member gives a gift they do not get a tax receipt - those gifts are not tax deductible and hence not taxable They are listed separately on our statement as gifts.

BTW - if your place of residence is outside the US your income up to about $80,000 is tax exempt. You must establish your foreign residence as your tax residence. This usually makes you liable for income tax in your country of residence, but I have found that much cheaper for me.

You need to file a 1055EZ with your 1040.

 

Countries do differ on how taxes are calculated. When I was in college, I worked with a mission in the USA. They could not pay me as a Canadian, so they sent a donation to the Bible College in my name to pay tuition, room and board an an allowance for books. It was not taxable...legally.

Gifts for services such as funerals and weddings are not taxable, by law, in Canada. If the donation is made to the church as a payment for services,,,,a set fee...it is income to that church and subject to the tax laws......Go figure!

My wife is an accountant and she wouldn't hear of me "cheating" the tax people.

I owned property in England and paid property taxes, plus rented the house. I had to pay taxes on this money.

When I left England, we could not bring all our money with us. It sat in an account in London and drew interest. I was not taxed on that money. We used that account when we returned home for visits.

When we sold the house, I not only lost my vote in UK elections, I had to pay huge taxes on the monies made from the sale.

Cheers,

Jim

 

If I remember right, gifts to people up to $10,000 can be declared as gifts by the person giving the gifts and the person receiving the gift does not have to pay taxes on those gifts. If they are not gifts, then they are income.

 

It is up to $12,000. Anyone can give anyone $12,000. And cash is not generally traceable. Half the economy in the US is sub rosa (under the table).

 

A general rule of thumb is this: any money you receive (taking aside any housing allowance or Accountable Reimbursement plan) that is received because of your status or performance as a minister is taxable income. A church buys you a new stove, a motorcycle, or a car? Taxed. You get a $50 Christmas bonus? Uncle Sam must get his share. Car allowance? That's salary too. You have to pay 10% plus 15.3% SECA on the first dollar. Again, ARP monies are not under this rule and your housing allowance is exempt from income tax but not SECA.

Gifts are a gray area. Use your conscience. If someone gives you a c-note because you did a great job at the funeral, wedding, or whatever, then that's probably income since its genesis was in your role/function. Someone slips you a $20 at the end of the service one day and says "Happy Birthday" ??? Well, that's your call. You could make the case that they might have given you this money even if you were not the minister. But if the money/gift is directly attributable to your function/status as a minister, then you should probably write Uncle Sam a check.

Personal example: A deacon at my first church gave me a very nice handmade clock for Christmas one year. I did not ask the man who made it how much the value was and submit the 30% tax (this was well before Bush's working Americans' tax relief). However, when this church also gave me a cash gift for my birthday and a cash gift for graduating Bible College, I paid Caesar. The latter was clearly income from my status/performance.

 

I was about to respond, and I ran across this. Very nicely said...better than I could have put it.

By the way, everyone...I'm a little rusty at this procedure. If you guys aren't too busy, we can role-play so I can get better. You all play the part of the gift-giving church member, and I'll practice determining if it's taxable or not.

 

Good. You have the fake cash, and I'm good at fake gratitude. :laugh:

 

NEVER tell the govt what they don't already know and can't find out without water boarding.