Payroll Taxes: Does your Organization Have to Match Medicare and Social Security Tax?

Is the church or nonprofit required to withhold federal payroll taxes from its employee paychecks?

If you are a church and if you have any non-minister employees, you must withhold Income tax, Social Security tax, and Medicare tax (FICA) from their paychecks.

Even if your church only has minister employees, you still may have to withhold income tax, if your minister has elected voluntary income tax withholds on his W-4. So, most churches will be required to withhold payroll taxes and remit them to the IRS.

How do you calculate payroll taxes?

Each employee, including the minister if he has elected voluntary income tax withholding, must complete a W-4.

For non-minister employees, you must withhold the following taxes:

1. Federal income taxes (based upon information provided in a W-4)(Use the federal payroll tax tables from IRS Publication 15, also known as Circular E)
2. Social Security payroll tax is 6.2% of gross wages.
3. Medicare payroll tax is 1.45% of gross wages.

Does the church or nonprofit have to match Medicare and Social Security tax?

Yes. Your organization must match the FICA tax withheld from your non-minister employee payroll checks.

The amount of the matching federal payroll taxes is:

• Social security 6.2%
• Medicare 1.45%

Total matching 7.65%

Regarding Medicare and Social Security tax and minister's paychecks...see my Clergy Tax page

Is your organization considered small, medium, or large by the IRS? Your payroll tax liability determines how often you have to pay your payroll taxes to the IRS.

Churches are exempt from federal unemployment taxes. Many states also grant exemption to churches from state unemployment taxes.

Consult the state unemployment tax agency for your particular state to make sure your state grants an exemption to churches

Additional Resoures

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