Are Church Musicians Employees?

If your church pays musicians to perform during services or other events, you’ll need to determine if they are employees or independent contractors. The biggest distinction between W-2 employees and 1099 workers is the amount of control you have over them.

With a W-2 employee, you have the right to direct the work being performed. That means giving instruction and providing the tools, training, and equipment to complete the work. You also set their hours and schedules. They often have a frequent association with the church and are paid hourly or salary.

Conversely, according to the IRS’s fact sheet on employee versus contractor designations, the general rule is that a worker is an independent contractor if you have the right to control only the result of the work, not what will be done, how, or when. As a result, 1099 contractors use their own methods and tools for completing work. Even though they may work for a specific project or period, they do it on their own schedule. And they can provide similar services to other businesses and can accept or turn down work opportunities as they wish. They often have an infrequent association with the church and are paid on contractor only. 

When evaluating the work of musicians you hire, you’ll need to consider the amount of control over them. So, for example, are you selecting the music they play or their performance, or is the musician collaborating in those activities?

If you decide a musician is an employee, then you’ll report their wages and all compensation for the year using a Form W-2, which will also show the withholdings you made from their pay. Or, if they’re an independent contractor, you’ll need to issue a Form 1099-NEC at tax time to report their compensation if you pay them $600 or more during the calendar year.

Contact Clergy Financial Resources to help you with the next steps.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com