Free Payroll Tool
Never miss a payroll tax deadline
Every 2026 federal and state payroll tax deadline on one filterable page.
View the Payroll Tax Calendar →Blog · Payroll Management · Nonprofit
Nonprofits & Religious Organizations: Year-End Payroll Checklist (2026)
Year-end payroll for nonprofits is W-2s and any 1099-NEC to employees and contractors by January 31, the fourth-quarter 941 and annual 940, and the nonprofit items that decide which boxes are right: IRS, Exempt organizations: What are employment taxes?, IRS. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Nonprofit items that shape the W-2 and 1099s
An organization exempt from income tax under section 501(c)(3) is also exempt from FUTA, and the exemption cannot be waived. Nonprofits that are not section 501(c)(3) organizations are not exempt and report FUTA on Form 940.
A minister's housing allowance is excludable from gross income for income tax but not for self-employment tax. The exclusion is limited to the lesser of the amount officially designated in advance, the amount actually used to provide a home, or the fair market rental value of the home.
A minister's earnings are not subject to federal income, Social Security, or Medicare tax withholding, even when the minister is a common-law employee of the church. The minister pays self-employment tax on those earnings, and the employer may withhold income tax only under a voluntary agreement with the minister.
The January calendar
W-2s and W-3 to the SSA and copies to employees by January 31; 1099-NEC for each contractor paid $2,000 or more in the year, the threshold for tax years after 2025, by the same date; Form 940 and the fourth-quarter 941 by January 31 as well, with a 10-day extension where all deposits were on time. Ten or more information returns of any kind, counted together, must be filed electronically. For nonprofits the reconciliation that matters is that the pay codes for grant-funded payroll allocation, clergy housing allowance and FUTA exemptions landed in the right W-2 boxes for every employee.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- An organization exempt from income tax under section 501(c)(3) is also exempt from FUTA, and the exemption cannot be waived. Nonprofits that are not section 501(c)(3) organizations are not exempt and report FUTA on Form 940. [IRS, Exempt organizations: What are employment taxes?]
- A minister's housing allowance is excludable from gross income for income tax but not for self-employment tax. The exclusion is limited to the lesser of the amount officially designated in advance, the amount actually used to provide a home, or the fair market rental value of the home. [IRS, Ministers' compensation and housing allowance (section 107)]
- A minister's earnings are not subject to federal income, Social Security, or Medicare tax withholding, even when the minister is a common-law employee of the church. The minister pays self-employment tax on those earnings, and the employer may withhold income tax only under a voluntary agreement with the minister. [IRS Publication 15-A (2026), section 4]
Read the full guide to how to handle year-end payroll and W-2s, and the rest of the nonprofit payroll library.
Managed Payroll, Handled.
BEG manages payroll at $45 per employee per month, all-inclusive. Get an instant cost comparison for your business.
Frequently Asked Questions
Year-end for nonprofits: IRS, Exempt organizations: What are employment taxes?
An organization exempt from income tax under section 501(c)(3) is also exempt from FUTA, and the exemption cannot be waived. Nonprofits that are not section 501(c)(3) organizations are not exempt and report FUTA on Form 940.
Year-end for nonprofits: IRS, Ministers' compensation and housing allowance (section 107)
A minister's housing allowance is excludable from gross income for income tax but not for self-employment tax. The exclusion is limited to the lesser of the amount officially designated in advance, the amount actually used to provide a home, or the fair market rental value of the home.
When are W-2s and 1099s due for a nonprofit?
January 31 for both, to the recipient and to the SSA or IRS. The 1099-NEC threshold is $2,000 for tax years after 2025, and 10 or more information returns of any type must be e-filed.
What does managed payroll cost for a nonprofit?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Grant-funded payroll allocation, clergy housing allowance and FUTA exemptions are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Nonprofits & Religious Organizations. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Understanding Employment Taxes
From the blog