Navigating Year-End – Handling Gifts to Staff and Volunteers

Part 3 – Handling Gifts to Staff and Volunteers




This is the time of year we like to present staff and volunteers with gifts. But how do we account for these in our financial records?

There are basically two categories of gifts:

1. Cash Christmas Gifts to Employees: In most cases these types of gifts represent taxable income and must be reported on the recipient’s W-2. Monetary gifts to volunteers should be avoided, per expert Frank Sommerville, as this “compensation” could make them an employee under your state law.

2.  Noncash Gifts to Employees and Volunteers: Noncash gifts may also create income required to be reported on the W-2 for an employee. A gift of property having very small value, “de minimis value”,  is nontaxable. Many churches use a $25 threshold for this type of gift. However, gift cards are treated as “cash equivalent” and may not be considered “de minimis”. The amount of this gift will need to be included in an employee’s W-2 income. Noncash gifts to volunteers are normally not taxable income to them.

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