This article discusses the basic requirements for a tax-exempt organization's compliance with employment tax and wage reporting compliance. A tax-exempt organization must--
- Obtain an employer identification number
- Determine employee status and verify work eligibility
- Request employee withholding form and verify employee identification information
- Calculate and pay advance employee earned income credit and notify employees about the EIC
- Calculate and deduct employees' income tax, Social Security, and Medicare amounts
- Make required deposits of taxes withheld plus any related employer taxes according to the instructions in Circular E (Publication 15) PDF
- File Forms 941 (or 944) and 940 (if required) and Form W-3, and furnish copies of Forms W-2 to employees
- File Form 945, Annual Return of Withheld Federal Income Tax PDF to report income tax withheld from non-payroll payments, such as pensions, IRAs, gambling winnings, and backup withholding
- Furnish required information returns
- File Form 1096 to transmit these returns to the IRS
- File Form 8027, Employer's Annual Information Return of Tip Income PDF to report tip income and allocated tips. This generally applies to tax-exempt organizations who have service employees, such as wait staff at a country club exempt under Code section 501(c)(7).
Interactive training
Learn more about the benefits, limitations and expectations of tax-exempt organizations by attending 10 courses at the online Small to mid-size tax exempt organization workshop.
Additional information
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