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Employment Tax Requirements

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)
File Forms 941 (or 944) and 940 (if required) and Form W-3, and furnish copies of Forms W-2 to employees
File Annual Return of Withheld Federal Income Tax">Form 945, Annual Return of Withheld Federal Income Tax 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 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).

Additional information

Return Due Dates for Exempt Organizations Employment Tax Returns

Return to Life Cycle of a Public Charity
Return to Life Cycle of a Private Foundation
Return to Life Cycle of a Social Welfare Organization
Return to Life Cycle of a Labor Organization
Return to Life Cycle of an Agricultural or Horticultural Organization
Return to Life Cycle of a Business League (Trade Association)

Page Last Reviewed or Updated: 2012-08-03