Skip to main content

Church Filing Requirements as a 501(c)(3)

Question:

Is a church required to apply for 501(c)(3) tax-exempt status and file an annual report with the IRS?

Answer:

Generally, churches are not required to file annual reports with the IRS or apply for tax-exempt status. Non-church tax exempt organizations must submit to often rigorous requirements that churches fortunately escape. These include Form 1023 to apply for recognition as a tax exempt organization and Form 990 to annually disclose financial and other information. 

The exception to the rule exempting churches from annual filing relates to at least two instances when Form 990 may be filed:
  • Unrelated business income tax (UBIT): according to IRS Pub. 598, a church which earns income from a "trade or business not substantially related to its exempt purpose" (excluding rental income from real property) will be required to report that income on Form 990-T.
  • Small Business Healthcare Tax Credit: a church which qualifies for and claims this credit will be required to file Form 990-T and Form 8941. 
While these rules apply to IRS filing at the federal level, there may be state and local government filings that congregations must prepare. Churches that choose to incorporate should be especially careful to understand what filings will be required at the state level.

Additional information on this topic is available through the link below.

Church Annual Filing Requirements

Comments

Popular posts from this blog

Qualified Small Employer HRAs

On December 13, 2016, President Obama signed the 21st Century Cures Act, allowing qualified small employers to offer Health Reimbursement Arrangements (HRA) that follow certain terms.

After the Affordable Care Act was passed, the IRS originally determined that an HRA was not a qualified group health plan. The Cures Act overrules this decision. HRAs are again an option for qualifying small employers.

To be eligible, the small employer must have fewer than 50 employees and must not offer a group health plan to any of its employees.

The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) must be subject to the following terms.
No salary reduction contributions may be made (i.e., 100% employer-funded).Employer must receive proof of employee’s minimum essential coverage.Reimbursements must be for qualifying medical expenses.Reimbursements for any year cannot exceed $4,950 (or $10,000 for family coverage), which will be adjusted annually for inflation.Employer must offer the …

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

Question:
 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 …

Revised Form I-9 Released

The U.S. Citizenship and Immigration Services released a revised Form I-9. All new hires after January 21, 2017, must complete the revised Form I-9. All prior released versions of Form I-9 will be invalid for new hires.

Employers are required to have a completed hard copy of Form I-9 on file for each employee. Current employees do not need to re-complete the revised form.

More information on Form I-9 can be found on the USCIS website.