Church Annual Filing Requirements

Question:

What documents must a church file at the end of the year?

Answer:

Typically, churches are not required to file the Form 990 and schedules that most non-profit organizations must prepare.

Year-end payroll reports most commonly encompass the following list:

Form W-2, Wage and Tax Statement
Form W-3, Transmittal of Wage and Tax Statements
Form 941 (or annual Form 944, if consent is gained from the IRS), Employer's Quarterly Federal Tax Return
Many states require reports for income tax withholding from employees and annual wage and tax statements
Form 1099-MISC, Miscellaneous Income (for payment of services to non-employee individuals in excess of $600 per year)
Form 1096, Annual Summary and Transmittal of U.S. Information Returns

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Rental of a Church Parsonage to a Non-Minister

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Housing Allowance and Form 1099-MISC Reporting

Question: A church provides its minister a housing allowance but believes 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. (Starting in 2020, Form 1099-MISC is replaced with Form 1099-NEC for non-employee compensation.) If the church reports his compensation, including the housing allowance, on the Form 1099-NEC as taxable income, will he be able to deduct his housing expenses somewhere else on the Form 1040? Answer: This question 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-NEC . Box 1 on Form W-2 reports taxable compensation. It is reduced to reflect the church's designation of a portion of his pay as non-taxable housing. Then, in Box 14 (Other), Form W-2 typically reports as a memorandum item his additional non-taxable, housing allowa

MinistryCPA - Corey A. Pfaffe, CPA, LLC

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