About this Checklist
Payroll for ministries involves unique legal and tax considerations that differ from secular organizations. This checklist highlights key areas—like dual tax status, housing allowances, and recordkeeping—to help ensure your ministry remains compliant and well-informed.
Have you verified whether or not your minister(s) have dual tax status, needing to file as employees for federal income taxes and as self-employed for Social Security tax purposes?
Do you manage voluntary withholdings from your staff’s Social Security taxes and, as such, complete the necessary quarterly and annual payroll tax filings?
If any ministers on your staff are receiving a housing allowance, have you entered the exact amount of the allowance into their employment contract or in the church’s board meeting minutes? (It’s necessary to do so to comply with tax codes.)
If any ministers on your staff are receiving a housing allowance, do you make certain to designate this before the start of each year?
Do you include “special occasion gifts” in employees’ taxable income when applicable?
Do you follow a written policy for reimbursing workers/volunteers for business-related expenses?
Is the staff of your ministry educated on how to follow the ministry’s reimbursement arrangement?
Do you have a timekeeping plan in place for your staff–including determining the point of contact for timecard approval and establishing a time card due date for each pay period?
Are you aware of how the Fair Labor Standard Act (FLSA) applies to your ministry and its employees individually?
Does your ministry retain payroll records for at least seven years after the individual leaves the ministry’s employment?
This is a sample document only. Your organization is responsible for compliance with all applicable laws. Accordingly, this checklist should not be used or adopted by your organization without first being reviewed and approved by a licensed attorney in your state. Brotherhood Mutual Insurance Company assumes no liability in the preparation and distribution of this checklist.
