Payroll for religious organizations.
Religious payroll serving Long Island, New York, New Jersey and beyond.
Churches, synagogues, mosques, temples and other houses of worship have their own payroll rules: clergy housing allowances, part-time musicians, childcare and custodial staff, and a budget built by ministry or program. PayNortheast runs payroll for religious organizations with the clergy rules set up correctly, and a dedicated account manager.
Clergy payroll and the housing allowance.
Ministers, priests, rabbis, imams and other clergy (the IRS calls them all “ministers”) have dual tax status: they’re paid as employees for income tax, but treated as self-employed for Social Security and Medicare. We set up your clergy’s pay that way from the first payroll.
- No Social Security or Medicare tax withheld from wages for ministerial services
- Federal income tax withheld only if your minister asks, under a voluntary withholding agreement that can also cover self-employment tax
- Housing allowance left out of income tax wages, but still counted for the minister’s self-employment tax
- On the W-2, the excludable housing allowance stays out of box 1 and can be reported in box 14
Before the first payroll
- Your congregation officially designates the housing allowance in advance, for example in board minutes or the budget
- We set it up in payroll exactly as designated
- Deciding how much to designate? Talk with your tax advisor
Ministers pay their own self-employment tax with their return unless the IRS has approved an exemption. PayNortheast runs payroll and doesn’t give tax advice.
Payroll for salaried and hourly staff at your house of worship.
Administrators, office staff, facilities staff and youth workers are paid like employees of any organization, with Social Security and Medicare withheld unless your organization has made a Form 8274 election.
- Salaried and hourly staff in the same payroll
- Hours tracked for non-exempt staff
- Overtime at time and a half for hours over 40 in a workweek
- Pay schedules set up for New York pay frequency rules
Exempt or non-exempt?
- Exempt status depends on job duties and salary, not the title
- Federal (FLSA) and New York wage rules both apply
- We pay each role the way you classify it; talk with your advisor about classification
Part-time staff at religious organizations, and volunteers.
Congregations on Long Island and across New York and New Jersey rely on part-time staff and volunteers alike.
Musicians
Part-time organists, pianists, cantors and music directors paid per service or by the hour.
Childcare
Hourly nursery and childcare staff, with hours tracked every pay period.
Custodial staff
Custodians and facilities staff paid on a regular schedule.
Volunteers
Volunteers aren’t paid through payroll. Stipends or gift cards beyond reimbursed expenses can be taxable pay, so talk with your tax advisor first.
Payroll taxes for religious organizations, federal and New York.
How the main payroll taxes apply depends on who does the work. The IRS uses “church” for houses of worship of every faith, including synagogues and mosques. We set up each tax with you, and your tax advisor can confirm the details.
Federal unemployment (FUTA)
Religious organizations exempt under section 501(c)(3), including churches, are exempt from FUTA tax.
Social Security and Medicare
Withheld and matched for employees other than clergy, unless the organization has filed Form 8274.
Form 8274 election
Churches and qualified church-controlled organizations opposed for religious reasons can elect out of employer Social Security and Medicare. It must be filed before the first quarterly Form 941 is due, and covered employees then pay self-employment tax.
NY unemployment insurance
Ministers, lay officers in religious roles, and caretakers at a place of worship are excluded. Other employees are generally covered once the organization pays $1,000 in a quarter or employs four or more people on 20 days in different weeks.
NY disability and Paid Family Leave
Clergy performing only religious duties are excluded. Other paid staff, such as office and custodial staff, generally must be covered, and we take the employee deductions in payroll.
Income tax withholding
Federal and New York income tax withheld for employees other than clergy, every pay run.
Religious payroll reports by ministry, program or fund.
Congregations on Long Island and across New York and New Jersey see payroll cost the way their budget is built, by ministry, program or fund.
- Payroll cost by ministry or program
- Labor cost by fund
- Employer taxes allocated
- Reports for your finance committee, board or treasurer
Reports congregations ask for
- Housing allowance totals for each minister
- Reports for your treasurer and accountant, in the format you need
- Full service payroll reporting
We can generate any report you need. Tell us what your accountant or auditor is asking for and we’ll put it together.
Full service payroll for congregations.
Payroll for religious organizations is part of our full service payroll, for congregations of every size and faith from Long Island to New Jersey.
Full service payroll
Every pay run, tax filing, W-2s and HR, handled by one team.
Full service payroll →Small business payroll
Done-for-you payroll with a real person to talk to.
Small business payroll →Mid-size employers
Departments, locations and multi-entity payroll.
Mid-size payroll →All industries we serve
Payroll by industry and business size.
Who we serve →Choose how you run payroll for your congregation.
Run it online, send it to us, or customize your own process. Same dedicated contact behind every one.
Online Portal
Process payroll and manage your team online, anytime.
Email or Text
Simply send us your hours. We do everything else.
Custom
Payroll as unique as your business. We build it around how you work.
“I want to enter the payroll. You enter the new hires.”
“I just want to send you the hours from my point of sale. You do the rest.”
“I want you to enter the daily logs, add the hours to payroll and add new hires.”
“Pay my staff automatically every payroll. I’ll let you know if anything changes.”
“I want to run everything myself online, but have someone to call when I need help.”
Tell us how you want it. We’ll build it. Let’s Chat →
Religious payroll FAQ
Do you run payroll for religious organizations?
Yes. We run payroll for churches, synagogues, mosques, temples and other religious organizations on Long Island and across New York and New Jersey, including clergy, staff and part-time employees.
How is a clergy housing allowance handled in payroll?
Once your congregation officially designates the amount in advance, we set it up so it’s left out of the minister’s income tax wages in box 1 of the W-2, and it can be shown in box 14. It still counts toward the minister’s self-employment tax. Your tax advisor can help you decide how much to designate.
Do religious organizations withhold Social Security and Medicare from clergy?
No. Wages for ministerial services, whether paid to a minister, priest, rabbi, imam or other clergy member, aren’t subject to Social Security and Medicare withholding. Clergy pay self-employment tax instead, unless the IRS has approved an exemption. A minister can ask the organization to withhold federal income tax under a voluntary agreement to help cover both.
Do religious organizations pay federal unemployment tax?
No. Churches and other religious organizations exempt under section 501(c)(3) are exempt from FUTA tax. New York unemployment insurance works differently: employees other than clergy and certain religious roles are generally covered once the organization meets the state’s payroll thresholds.
Does a religious organization need New York disability and Paid Family Leave?
Generally yes, for paid staff such as office and custodial employees. Clergy performing only religious duties, and certain teaching or professional roles at religious organizations, are excluded. We take the employee deductions in payroll.
Can we pay volunteers through payroll?
Volunteers aren’t paid through payroll. If your congregation gives volunteers stipends, gift cards or other payments beyond reimbursing their expenses, those payments may be taxable. Talk with your tax advisor before setting up payments to volunteers.
Can we see payroll cost by ministry or fund?
Yes. Reports show payroll cost by ministry, program or fund, ready for your treasurer, finance committee or board.
Let’s talk about payroll for your congregation.
Tell us about your clergy, staff and how your budget is organized. We’ll show you how PayNortheast would run payroll on Long Island, across New York and in New Jersey.
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