1. Before Your Final Payroll of 2024: Love Offerings and Gift Cards are Taxable!!
FOR STAFF
Love offerings (including gift cards) collected and distributed for your pastor(s) or other staff members should be run through payroll and included in the W-2’s. Additionally, non-clergy staff love offerings (including gift cards) are subject to FICA (Social Security and Medicare).
TIP: If you haven’t done this until now, we recommend calculating what has been given and adding it in the final payroll of 2024.
FOR MISSIONARIES & GUEST SPEAKERS
If you provide love offerings for missionaries or guest speakers it is the responsibility of the recipient to report those gifts to the IRS. If the amount for the year reaches $600 or more the church is responsible to issue a 1099 to the recipient (see 1099-NEC below).
2. Request W-9 Forms
You should request a W-9 form now from non-employee compensation payments such as contract labor, including love offerings to non-employees of $600 or more to provide you with their pertinent information for Form 1099-NEC (see below) and to keep on file.
3. 2025 Housing or Parsonage Allowance for Pastors
Define how much of your pastor’s pay package for 2025 is housing allowance. IMPORTANT: If that allowance has changed, make sure that the amounts have been recorded in the governing board minutes.
1. 2024 Year-End Donor Receipts
Please make sure all year-end donor receipts are provided to the donor by January 31, 2025 and include the phrase “No goods or services were provided in exchange for these tax-deductible contributions other than intangible religious benefits.” This phrase is very important and will ensure the tax deductibility of the donors’ contributions.
2. 2024 W-2’s and W-3 Transmittal Form
The due date for filing 2024 forms W-2 and W-3 with the SSA (Social Security Administration) is January 31, 2025. NOTE: Higher penalties will apply for intentional disregard of filing requirements and failure to furnish Form W-2. For complete information, see the 2024 general instructions for Forms W-2 and W-3 at IRS.gov.
3. Form 1099-NEC
Form 1099-NEC is to be filed on or before January 31, 2025 when you are reporting non-employee compensation payments such as contract labor, including love offerings to non-employees of $600 or more.
NOTE: You want to make sure you are using Form 1099-NEC rather than Form 1099-MISC. Form 1099-MISC is used for reporting certain income such as royalties, rents, prizes and awards, and other income. Use the 1096 Transmittal Form to summarize and submit your 1099 forms.
2025 Mileage Rate
The standard mileage rate for IRS mileage deductions or church reimbursements will be $.070 (up from $0.67 in 2024). You’re not required to match this rate, but the IRS will not permit you to exceed this amount.
