Skip to main content

Churches Filing Annual/Quarterly Federal Tax Return


A church recently received notification of its new federal Employer's Identification Number (EIN) which stated that it must file Form 940, Form 941, and Form 1120. Why does the church have to file these and can it avoid doing so?


Churches as tax exempt organizations are not subject to filing corporate income tax returns (Form 1120). Further, as tax exempt organizations, churches are not subject to federal unemployment tax (Form 940). 

Most churches are however responsible to file Form 941 on a quarterly basis. On this form, churches report employee earnings and withholdings, and employer taxes due.

Form 944 may be requested instead of Form 941. But a new employer must request the opt out by calling or writing the IRS. For the opt-out deadline, see Rev. Proc. 2009-51: Rev. Proc. 2009-51. Smaller churches will find it advantageous to file the Form 944 as it is filed only once a year. 

However, some small churches with only a solo-pastor who has no federal withholding submit only an annual Form W-2 and file neither Form 941 nor Form 944. Be aware, once a church begins filing Form 941 or Form 944, the church needs to continue filing even if the church has no employees for a period of time.


  1. How do I report the pastor's salary on the 941 since he has no withholdings? I was told not to report on a 941 but now my 941's do not match my W2's, so I dont know how to report my W3.

  2. Misty,
    Report your pastor's taxable salary along with other employees' compensation on Line 2 of Form 941. Do not include housing allowance compensation on any of the Form 941 lines.
    Further, because a minister is not an employee eligible or subject to FICA tax withholding, none of his compensation should be included on lines 5a or 5c.

  3. Are churches required to complete Form 941/944 if they have only one employee (the minister) who doesn't have any withholdings? The church has been completing W2s for the minister the past couple of years but has never received a notification to complete Form 941 or 944 - should they start this year?

  4. Elizabeth,

    I apologize for the late response. In the past two weeks, we have actually been very busy filing Form 941/944 for a number of our clients.

    Some of our clients have received IRS correspondence stating that they are required to file Form 941 or Form 944. After much inconclusive communication between the church and the IRS, some churches opted to file Form 941 and then request permission to file Form 944.

    Each situation is different, we suggest you consult your personal tax professional for guidance on how your church should handle Form 941/944 filings.


Post a Comment

Popular posts from this blog

Housing Allowance and Form 1099-MISC Reporting


A church provides its minister a housing allowance, but for other purposes it believes that it must report the full amount of compensation (including the non-taxable housing allowance portion) on Form 1099-MISC (in order to demonstrate the full earnings of the minister). If the church reports his compensation,including the housing allowance, on Form 1099-MISC as taxable income, will he be able to deduct his housing expenses somewhere else on the Form 1040?


This questions brings up a couple of issues. First, most ministers are properly classified as employees who receive Form W-2, not as independent contractors who receive Form 1099-MISC. On Form W-2, Box 1 for taxable compensation is reduced reflecting the church's designation of a portion of his pay as non-taxable. Then in Box 14, it typically reports as a memorandum item his additional non-taxable, housing allowance compensation. In the situation addressed in the question, this Form W-2 reporting may or may not a…

Review: Form 1099 Payments to 501(c)(3) Organizations


A church rented space from another church last year. Should it request a completed Form W-9 and issue Form 1099-MISC?


We have written similar blog posts on this topic in the past (listed below), but we figured it was a good time for a review. 

Payments from one 501(c)(3) organization to another 501(c)(3) organization are not subject to Form 1099-MISC reporting. The 2015 Instructions for Form 1099-MISC state that "payments to a tax-exempt organization" are exempt from reporting a Form 1099-MISC. 

The following are typical examples of payments of $600 or more by a church which are subject to reporting a Form 1099-MISC:
Rent paid to an individual (non-corporation)Payments for services rendered by individuals who are not employees (e.g. janitorial service, facilities, snow removal, guest speakers)Support sent directly to missionariesHere are some similar blog posts that we have written in the past:

Form 1099 for Payments to Other Ministries
Form 1099 for Non-profit?

Gifts Paid Out of Church Funds: Form 1099-MISC Requirements

 A church gave a wedding gift of $1000 to a couple who are church members. No goods or services were provided by the couple in exchange for the gift.  Is a Form 1099-MISC required? 
Answer: In the following answer, we assume that the couple are not employees of the church from whom the gift could not be viewed as compensation for their services. Also, the amount seems to be small enough to avoid any concerns of "private inurement."

Accordingly, no Form 1099-MISC is required. According to the 2017 IRS Instructions for Form 1099-MISC a Form 1099-MISC is only required for payment of goods or services. The requirements are as follows:
"File Form 1099-MISC, Miscellaneous Income, for each person to whom you have paid during the year:  At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8);  At least $600 in:  1. Rents (box 1);  2. Services performed by someone who is not your …