Is our church truly exempt from tax filing?

by Michael
(New Concord)

Our church has never filed a Form 941 to my knowledge. However, I want to make sure we are right in not doing it.

I am the pastor and the only employee of the church and always understood that our assembly is exempt from having to file or to withhold any income taxes from my paycheck since I am both an employee and self-employed (duel status).

I do recognize that if we hired a secretary, we would have to withhold taxes and file the 941.

Just one more thing: we have a gas well on the church property and receive monthly checks of $50-$100. Would this "income" necessitate a form 941 be filed.

Any insight on this would be greatly appreciated. Thanks.

Answer

You are right in that you are not required to file a Form 941 since you are not having the church hold out any “voluntary” income tax. Form 941 is an Employer’s QUARTERLY Federal Tax Return and is only used to report payroll taxes such as you mentioned from a paid church secretary.

Your church’s gas working interest income is probably unrelated business income. If a church has over $1,000 of gross UBI in any given fiscal (tax) year, you will need to file an IRS Form 990-T.
Form 990-T instructions.

A great resource to learn more about unrelated business income is Zondervan 2010 Church and Nonprofit Tax and Financial Guide

Hope this helps,

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Is our church truly exempt from tax filing?

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