Give Staff a Tax-Free Disaster Relief Bonus

Below is information we have received from Clergy Advantage, a company specializing in clergy tax, that may be of interest to our ministers and congregations. (The information below is from Clergy Advantage. We encourage you to consult them or your tax and/or accounting consultant for additional information as it may apply to you)

Give Your Staff a Tax-Free Bonus!

Designate bonuses to your staff as Disaster Relief Payments and help them avoid tax!

Act Today!

>Any employer is allowed to make tax-free disaster relief payments to their employees.

>Because of COVID-19, the country has been declared a national disaster area. This could be rescinded at any time which would mean that you would no longer be allowed to pay your employees a non-taxable disaster relief payment.

>The Code does not require any substantiation for the actual disaster-related expenses.

>This payment shouldn't replace regular wages.

>This payment should not be included anywhere on the W-2 Form.

>For church accounting purposes these payments would go under the category of non-taxable Section 139 Disaster Relief Payments.

>When you issue these payments to your employees, you should include a notice that says something like:

"The presidentially declared national disaster for the COVID-19 pandemic is still in effect today. We have experienced and are continuing to experience increased housing, food, and gas costs, combined with schooling issues as well as other additional COVID-19 related expenses. One of the provisions of the Internal Revenue Code is a rule (IRS Section 139) allowing an employer to make a tax-free disaster relief payment to all employees. This check is provided to you to reduce your increased costs. You will not pay tax on it and it will not be reported on your W-2 Form."

Click here to view IRS Code Section 139 regarding disaster relief payments: https://www.law.cornell.edu/uscode/text/26/139

For more information about Clergy Advantage, visit https://www.clergysupport.com/