Should our church’s organist be considered an employee or a contractor? Do we have to report his income on a 1099 or W-2?

Each person who receives payment for services rendered in a church should be evaluated to determine if they meet the requirements to be considered an employee or a contractor for the church.  The Internal Revenue Service has issued guidance on tests to help determine the employment status and that information is available on the Training Materials page of the Treasurer’s Office website.  In each case, you should refer to this guidance to determine the specifics of your situation.  In general, those individuals who provide music every (or most) Sundays during the church service would meet the requirements to be considered church employees – they are told what to play, when to play, musical instruments are provided, etc.  This employee status means that Social Security and Medicare taxes should be withheld from the employee’s pay and paid by the employer.  The employee should receive a W-2 in January of each year.  Musicians who come into a church and only play for special services may be considered to be contractors if they meet the IRS guidelines.  Some of this determination would be if they choose their own music to play, they bring their own instruments, etc.  In that case, they should be considered a contractor and issued a 1099-MISC if the income is $600 or more in a year.  The NC Department of Revenue has advised the Treasurer’s Office staff that they consider the regular church pianist or organist to be an employee of the church.