Church Payroll

By Stefan Schumacher, Editor of The Payroll Blog

You may not think of a house of worship the same way you think of a small business, but churches still have to handle payroll and payroll taxes for their employees.

Religious organizations are responsible for withholding and paying Social Security and Medicare taxes, although they are not required to pay unemployment taxes. There are some church payroll scenarios, however, when the organization is not responsible for those FICA (Social Security, Medicare) taxes. Those include the following:

• For wages paid for services by a duly ordained, commissioned or licensed minister of a church, or by a member of a religious order for duties required by the order.

• When wages of less than $108.28 are paid to an employee by the religious organization in a calendar year.

• If the organization opposes FICA taxes for religious reasons and files IRS Form 8274, Certification by Churches and Qualified Church Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes. There are restrictions and limitations with filing the form. Refer to the IRS for guidance.

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