Payroll - Taxable Love Offering

Fund Accounting, Accounts Payable, Accounts Receivable, Payroll

Payroll - Taxable Love Offering

Postby ngaham » Tue Aug 13, 2019 1:33 pm

Hey,
I am trying to figure out the best way to handle this. We had a member give $50.00 and designated it for our Youth Pastor. The check was deposited and I entered it into our love offering liability account to be paid. I thought I would be able to create a pay item in payroll to draw from this liability account so the $50 would be taxed, but that is not the case. I am looking for a recommendation on how to resolve this and have it reflected correctly on the Youth Pastor's check.
ngaham
 
Posts: 182
Joined: Wed Mar 15, 2017 9:25 am

Re: Payroll - Taxable Love Offering

Postby NeilZ » Tue Aug 13, 2019 6:20 pm

ngaham wrote:Hey,
I am trying to figure out the best way to handle this. We had a member give $50.00 and designated it for our Youth Pastor. The check was deposited and I entered it into our love offering liability account to be paid. I thought I would be able to create a pay item in payroll to draw from this liability account so the $50 would be taxed, but that is not the case. I am looking for a recommendation on how to resolve this and have it reflected correctly on the Youth Pastor's check.


Two things;

1. Because this was specifically designated for the Youth Pastor, you cannot give the donor any tax deduction as it will go to support a specific person.

2. I would not have used a liability, this is a special income item, and as such will also have a special expense account. Then you will need to create a new Payroll item in order to have it taxed.

You see this type of designation causes more problems than its worth. Since the donor cannot get a tax deduction for the donation it may be easier just to tell the donor that in future please just give the check to the person. You can then reference this webpage if they have questions:

https://www.ecfa.org/Content/CharitableGivingGiftsThatMayNotQualify

I'd then just write a check to the Youth Pastor from Accounts Payable, and reference the fact that the donor wanted to give the Youth Pastor $50.00, but made the check out to the church. The church is only being a conduit of the gift, but I would stipulate to the Youth Pastor that he declare the income on his income tax return.

Neil Zampella

Using PC+ since 1999.
NeilZ
 
Posts: 8865
Joined: Wed Oct 08, 2003 12:20 am
Location: Connellsville, PA