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  • Writer's pictureMichael Wright

5 Crucial IRS Guidelines Every Church Should Know

As professionals working within the religious sector, it is essential to stay informed about the IRS guidelines set forth in IRS Publication 1828. Compliance with these regulations not only ensures the financial integrity of the church but also fosters transparency and accountability within the community. Here are four key guidelines that every church should adhere to:

IRS Guidelines

1. Tax-Exempt Status


Maintaining tax-exempt status is a cornerstone for churches. It allows them to receive tax-deductible donations and exempts them from paying federal income tax. To retain this status, churches must avoid engaging in activities that violate the IRS regulations, such as substantial political campaign intervention or excessive unrelated business income.


2. Record Keeping


Accurate record-keeping is crucial for churches to demonstrate transparency and accountability. The IRS requires churches to maintain detailed records of donations, expenses, and financial transactions. These records not only ensure compliance with the law but also facilitate smooth audits if required.


3. Employment Taxes


Churches often have employees, from pastors to administrative staff. Understanding and correctly handling employment taxes is paramount. This includes withholding federal income tax, Social Security, and Medicare taxes from employees' pay, as well as paying the employer's share of Social Security and Medicare taxes.



4. Unrelated Business Income


While churches are generally exempt from paying taxes on income directly related to their religious mission, they may be subject to unrelated business income tax (UBIT) on revenue generated from unrelated business activities. It is essential for churches to properly identify and report such income to comply with the IRS regulations.


In conclusion, churches play a vital role in society, and adhering to the IRS guidelines outlined in Publication 1828 is crucial for maintaining their integrity and financial well-being. By staying informed and compliant, churches can continue to serve their communities effectively and uphold the trust placed in them.


For more information on Unrelated Business Income click here

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