Skip to main content

Form 941 and 944 Overview

By

Forms 941 and 944 are both used to report payroll expenses and taxes to the IRS. The forms include information such as total wages paid, number of employees, income taxes withheld, group term life insurance, sick pay, tips, Social Security taxes (employer and employee portions), and Medicare taxes (employer and employee portions). These forms report the total liability that the employer owes to the IRS. Both forms have the same purpose, but there are a few differences. 

Even though the forms are used for the same purpose, there is one main difference. Form 941 is filed quarterly and is the standard payroll reporting form that employers use. Form 944 is filed annually and can only be filed by employers who have less than $1,000 in payroll tax liabilities. 

If your organization...

  • Has employees
  • Has more than $1,000 in Federal Tax liability (Federal income withholdings, Medicare, and Social Security)
  • Has not received permission from the IRS to file Form 944
Then you should file Form 941 quarterly. 

If your organization...

  • Has employees
  • Has less than $1,000 in Federal Tax liability
  • Has received permission from the IRS to file Form 944
Then Form 944 can be filed in place of the quarterly Form 941. 

One question we frequently receive is how a ministers wages should be included on the payroll filing. According to IRS Section 1402(e) and 3121(c), ministers are not subject to mandatory income tax withholding. Unless one or more ministerial employees request non-mandatory withholding, church employers with only ministerial employees do not need to file Form 941 or Form 944. The IRS Ministers Audit Technique Guide explains in further detail a minister's treatments for social security, Medicare tax, Federal Insurance Compensation Act taxes, and income tax withholding. Form 941 or 944 must be filed when non-ministerial employees are compensated or ministers request withholding.

If you have any questions or need help with payroll filings please contact our office to discuss how we can help you. 




  

Labels:

Comments

Post a Comment

Popular posts from this blog

Rental of a Church Parsonage to a Non-Minister

By
Question: A church owns a parsonage, but the pastor does not use it as he owns his own home. The church rents the parsonage to a tenant other than a minister or employee of the church. Will the church be responsible for paying income tax on these monies as Unrelated Business Income (filing a Form 990-T) even if the money is used to carry on the business of the church? Answer: Whether the money is used for church purposes is irrelevant.  IRS Publication 598  states: "If an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business." Fortunately, in the case of rental income from real property, such income is "excluded in computing unrelated business taxable income" (Publication 598). Caution: see content below regarding debt-financed property.  However, a second concern not a
Post a Comment
Read more

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

By Anonymous
Question: A church rented space from another church last year. Should it request a completed Form W-9 and issue Form 1099-MISC? Answer: Payments from one 501(c)(3) organization to another 501(c)(3) organization are not subject to Form 1099-MISC reporting. The IRS 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 missionaries
2 comments
Read more

Form 944 or 941 Filing for Churches

By Anonymous
Question:   A new church filed for an employer identification number (EIN) recently. It received notification from the IRS about the EIN, stating that the church must file Form 944 by the following January deadline. The church has no non-ministerial staff members. Since income tax withholding is elective by ministers and none of the pastors has elected to request non-mandatory withholding is the church required to file Form 944 annually? Also, a quarterly Form 941 (rather than an annual Form 944) is required of some employers. Which IRS form, if any, should be filed? Answer: According to IRS Section 1402(c) and 3121(c), ministers are not subject to mandatory income tax withholding. Unless one or more ministerial employees request non-mandatory withholding, church employers with only ministerial employees do not need to file Form 941 or Form 944.  The IRS  Ministers Audit Technique Guide  explains in further detail a minister's treatments for social security, Medicare tax, Fed
Post a Comment
Read more