Exemption from Social Security

Many churches mistakenly assume that they are exempt.

Church Law and Tax 1992-07-01 Recent Developments

Church Reporting Obligations

The IRS has reissued Form 8274 (“Certification by Churches and Qualified Church Controlled Organizations Electing Exemption from Employer Social Security and Medicare Taxes”). The revised IRS form is not significantly different from the previous form. This form is filed by churches that wish to exempt themselves from the employer’s share of FICA taxes. It must be filed with the IRS prior to the deadline for filing the first required quarterly employer’s tax return (Form 941) after July 17, 1984 reporting nonminister wages and tax withholdings. Since a Form 941 is due on the last day of the month following the end of each calendar quarter (i.e., April 30, July 31, October 31, January 31), the election for churches in existence as of July of 1984 and having at least one nonminister employee was October 30, 1984 (the day before the deadline for filing Form 941 for the quarter ending September 30). Churches either not in existence as of July of 1984, or not having nonminister employees at that time, have until the day prior to the deadline for their first Form 941 (reporting nonminister wages and tax withholdings) to file an election (Form 8274). Churches that file this form are exempt from the employer’s share of FICA taxes, but their nonminister employees are treated as self-employed for social security purposes. As a result, nonminister employees pay the 15.3% self-employment tax. Unfortunately, many churches that filed this form mistakenly assume that their employees are exempt from social security. Nothing could be further from the truth.

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