December is a good time to check with all nonminister church employees to see if they need to file new W-4 forms with the church. The W-4 form is used by employees to report withholding allowances. This information will determine how much income tax the church withholds from the wages of a nonminister employee. The important point is this—W-4 forms often become obsolete because of changes in an employee’s circumstances, but the employee fails to submit a new form to the church. This can result in withholding that is significantly above or below the actual tax liability. Here are some reasons why an employee’s W-4 may be inaccurate—the birth of a new child, a pay raise, or significant medical expenses. These same considerations apply to ministers who have elected “voluntary withholding” of their taxes.
This content originally appeared in Church Treasurer Alert, December 2001.