A bank officer, a grant application or a new board member asks for "your 990," and the treasurer is not sure whether the church has one, should have one, or has been missing a filing for years. In most cases the church has done nothing wrong. Churches are generally excepted from Form 990. That exception is narrow, though, and it sits beside a list of returns a church does file.
What a church generally does not file
Form 990, 990-EZ and 990-N. The IRS instructions for Form 990 list organizations that do not have to file Form 990 or 990-EZ. The list includes a church, an interchurch organization of local units of a church, a convention or association of churches, and an integrated auxiliary of a church. Publication 1828 lists churches among the organizations not required to file Form 990, 990-EZ or 990-N.
An application for exemption. Publication 1828 says churches that meet the requirements of section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status. It adds that many churches seek recognition anyway because it assures leaders, members and contributors, and that a church with a parent organization may already be covered by the parent's group ruling.
So when someone asks for a 990, the accurate reply is usually that the church is not required to file one, with an offer of what it does have: financial statements, a budget, and a determination or group exemption letter if one exists.
Payroll returns
A church with employees is an employer like any other for most filing purposes. Publication 1828 says churches are generally required to withhold, report and pay income and FICA taxes for their employees.
- Form 941, the employer's quarterly return, or the annual Form 944 for small employers the IRS has notified to use it.
- Forms W-2 and W-3. For 2026 wages, the W-2 instructions give February 1, 2027 as the date to furnish Forms W-2 to employees and to file them with the Social Security Administration.
A minister's pay appears on these forms differently from other staff, and Publication 1828 says churches are not liable for federal unemployment (FUTA) tax. Both points are explained in church payroll basics.
Information returns for people who are not employees
The IRS instructions generally call for Form 1099-NEC for each person to whom the organization paid at least $2,000 during the year for services performed by someone who is not its employee. Exceptions apply, including most payments to corporations, and the CPA confirms who gets one. The instructions state that this threshold applies for tax years beginning after 2025 and may be adjusted for inflation beginning in 2027. They also list rents of at least $2,000 as reportable on Form 1099-MISC. Form 1099-NEC is due on or before January 31, moving to the next business day when that date falls on a weekend or legal holiday.
For a church this commonly reaches guest speakers, musicians, a cleaning or lawn service run by an individual, and repair work. Two record habits make January painless: collect a Form W-9 before the first payment, and code payments so a year-end total by payee is one report. Whether a worker is a contractor or an employee is decided on the facts, and it is a question for the tax adviser, not the bookkeeper.
Form 990-T for unrelated business income
The Form 990 exception does not extend to Form 990-T. The Form 990-T instructions require the return from an exempt organization with gross income of $1,000 or more from a regularly conducted unrelated trade or business, and Publication 1828 applies that to churches. It is generally due by the 15th day of the 5th month after the end of the tax year.
Publication 1828 describes income as subject to the tax when the activity is a trade or business, is regularly carried on, and is not substantially related to the organization's exempt purpose. It adds that using the money for ministry does not make an activity related, and it lists exceptions, including activities where substantially all the work is done by volunteers. Applying those tests to a parking lot rented on weekdays, a coffee shop or a cell tower lease is tax work. The books' job is to keep that income and its direct costs in their own accounts so the CPA can evaluate them.
Form 8274, if the church made the election
A church opposed for religious reasons to paying Social Security and Medicare taxes may elect exemption from the employer's share by filing Form 8274. It is an election, not an annual return, and the form's instructions say the church must still withhold income tax, issue Forms W-2 and file Form 941 or 944. Keep a copy permanently, because it changes how every non-minister paycheck is handled.
Church-related organizations that are not churches
Publication 1828 draws a line between churches and other religious organizations, and says that, generally, religious organizations must file Form 990, 990-EZ or 990-N unless an exception applies. The exception for integrated auxiliaries has its own tests. A school, camp, counseling center, mission agency or foundation with its own EIN or its own incorporation should not assume it shares the church's filing position.
Classification is a question for a CPA, tax adviser or attorney. From the bookkeeping side, the useful step is to list every legal entity and EIN connected with the church and to ask that question once for each.
State and local filings
States have their own requirements, which can include payroll withholding and unemployment reporting, sales tax, property tax exemption paperwork and corporate annual reports. These differ by state and are outside the scope of this guide. Check with the state agencies directly or with the church's CPA or attorney.
What the books have to support
- Payroll records that tie to each Form 941 or 944 and to the Forms W-2
- A Form W-9 and a payment history for every non-employee payee
- Separate accounts for any income that might be unrelated business income
- A permanent file with the EIN letter, any determination or group exemption letter, and any Form 8274
- A calendar of due dates, with the name of the person responsible for each
How long to keep each of these is covered in which church financial records to keep. Danielson Bookkeeping does not provide tax preparation or tax advice; the work is keeping records a CPA can work from, as described under how we work.
