ICHRA Reporting Requirements

ICHRA Reporting Requirements Individual Coverage Health Reimbursement Arrangements (ICHRAs) first became available in 2021. ICHRAs allow employers to reimburse employees for individual health insurance coverage (or Medicare coverage) that employees obtain on their own. ICHRAs provide employers with an alternative to offering traditional group health insurance coverage to employees. Although ICHRAs may not be a…

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Online W-2 and 1099 Filing for Churches

Start Filing W-2 and 1099 Forms today! Online W-2 and 1099 Filing for Churches The W-2 Form is probably one of the most common tax forms used by churches today, as every employee must receive one prior to filing their income taxes out and every employer must produce them. The mere mention of filing a…

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W-2 vs. 1099: Which workers get which?

W-2 vs. 1099: Which workers get which? As the economy continues to expand, churches now more than ever need to possess a thorough understanding of the classification for each person performing services for the church. Knowing whether the IRS views someone as your employee or as an independent contractor dictates tax obligations and associated paperwork,…

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The Myths of the 1099-NEC forms

The Myths of the 1099-NEC forms 1099-NEC is a new form, as of the 2020 tax reporting year that has replaced some of the functions of 1099-MISC.  The IRS requires you to report information about people who perform work for the church but are not on the payroll. This involves filling out Form 1099-NEC: Nonemployee Compensation. Unlike…

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W-4 Withholding Calculator for Clergy

W-4 Withholding Calculator for Clergy According to IRS rules, income tax withholding for ministers is voluntary.  If you do not complete a W-4 form, or if you indicate “exempt”, no federal tax will be withheld, and you should make quarterly estimated tax payments.  Alternatively, you can complete Form W-4 so that your church withholds a…

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Are Church Musicians Employees?

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…

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Understanding Form 941

Understanding Form 941  Churches file Form 941 four times a year to report income taxes, social security tax, or Medicare tax withheld from employees’ paychecks. As the IRS explains:   “Federal law requires you, as an employer, to withhold certain taxes from your employees’ pay. Each time you pay wages, you must withhold — or…

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Employees Versus Independent Contractors

Employees Versus Independent Contractors One of the most common employment mistakes that churches make is misunderstanding the difference between an employee and an independent contractor. Each employee should receive a Form W2 from the church each year. Employees are subject to a wide array of employment laws and tax requirements.  On the other hand, each…

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Ministers Versus Non-Ministry Employees

Ministers Versus Non-Ministry Employees  Churches should make a careful distinction between their paid workers who are acting as ministers versus those who are non-ministry employees. There are several considerations that can only apply to those who qualify as “ministers.” First, ministers can receive a clergy housing allowance, if properly designated, which shields a portion of…

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Can employees claim “exempt” on W-4?

You use a Form W-4 to determine how much federal tax withholding you need from your paycheck. Form W-4 tells an employer the amount to withhold from an employee’s paycheck for federal tax purposes. When you file as exempt from withholding with your employer for federal tax withholding, you don’t make any federal income tax payments during the year. (A taxpayer is still…

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