12 Payroll Reporting Requirements for Churches

1. Obtain an employer identification number from the IRS by filing Form SS-4.

2. Determine whether each worker is an employee or self-employed, and obtain each worker’s
social security number.

3. Obtain a completed W-4 (withholding allowance certificate) and I-9 from each employee.

4. Calculate the proper amount of employee wages, including fringe benefits and other taxable
items, and excluding non-taxable amounts.

5. Obtain a copy of the board approved minister’s non-taxable housing allowance
documentation.

6. Withhold the correct amount of federal income taxes from an employee’s wages as
determined from tables that appear in IRS Circular E.

7. Withhold FICA (Social Security and Medicare) taxes from employee wages other than the
wages of qualified ministers who should be treated as self-employed for FICA tax purposes.

8. Inform qualified ministers about their responsibility to pay self-employment taxes on their
individual income tax returns (unless the minister has opted out by filing Form 4361 with the
IRS).

9. Deposit withheld taxes (both income taxes and employees’ share of FICA taxes) plus the
employer’s share of FICA. These taxes must be deposited with a bank if they exceed $500 at
the end of any month. Larger employers may have to make deposits more frequently.

10. File with IRS a quarterly Form 941 (employer’s tax return) if an employer has any
employees who were paid wages or whose wages were subject to tax withholding.

11. Issue a Form W-2 to every employee before February 1 of the following year and send copies
of all W-2’s to the Social Security Administration before March 1 of the following year with
a Form W-3.

12. Issue a Form 1099-MISC to any nonemployee worker (who was paid $600 or more) before
February 1 of the following year and send copies to the IRS before March 1 of the following
year with a Form 1096.