Church Payroll Administration

Church Payroll Administration2021-03-18T08:01:38+00:00

Bringing the expertise of an industry leader to your payroll. Enjoy a convenient, reliable easy-to-use payroll and clergy care solution. Pricing and fees may vary

Why It Pays to Outsource Your Payroll

Frequently Asked Questions

What about independent contractors?2017-04-19T19:28:41+00:00

Form W-9 is used by an organization to request the name, address, and Social Security number for an independent contractor who will be providing services to the organization. Another term for an independent contractor would be consultant or freelancer. There’s a distinction made between independent contractors and employees. They are treated differently in how their income is taxed and reported to the IRS.

All non-employee recipients of church funds (i.e. guest speakers, independent contractors) who receive $600.00 or more during the year must receive a Form 1099. The funds cannot be classified as non-taxable “love offerings”.

Who is an Employee?2017-04-19T20:43:34+00:00

A general rule is that anyone who performs services for your church is your employee if you can control what will be done and how it will be done. The church should maintain an accurate and current record of employees. If the church pays an individual more than $100.00 during the year, with exception of the Clergy, then that person is an employee and Medicare and Social Security taxes (FICA) must be withheld and a Form W-2 must be issued at the end of the year. Churches must withhold the employee’s share and pay their matching share of FICA for non-clergy employees. Churches cannot classify non-clergy employees as self-employed to avoid paying FICA.

What about Independent Contractors?2017-04-19T20:41:17+00:00

Form W-9 is used by an organization to request the name, address, and Social Security number for an independent contractor who will be providing services to the organization. Another term for an independent contractor would be consultant or freelancer. There’s a distinction made between independent contractors and employees. They are treated differently in how their income is taxed and reported to the IRS. All non-employee recipients of church funds (i.e. guest speakers, independent contractors) who receive $600.00 or more during the year must receive a Form 1099. The funds cannot be classified as non-taxable “love offerings”.

What about our Musicians?2017-03-24T18:37:04+00:00

Furthermore, musicians are not independent contractors and their compensation should comply with federal regulations. If the church can control (1) who performs the work, (2) what will be done (the end result), and (3) when it will be done, then the person performing that job is an employee of the church.

Caution?2017-04-19T20:46:35+00:00

If your church incorrectly classifies an individual as an independent contractor, it can be held liable for employment taxes for that worker, plus a penalty. Even worse, you can be liable for some of his taxes! An employee is to be paid using the system of a W-2, which includes withholdings for Social Security and Medicare taxes.

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