An Overview of 501(c)(3) Tax-Exempt Status and IRS Form 990 Filing Requirements for Churches

- Updated April 18, 2024 - 12.00 PM Admin, ExpressTaxExempt

The IRS has established a set of guidelines and requirements for each type of nonprofit to obtain and maintain tax exemption.

This article further explores the requirements for churches to obtain 501(c)(3) tax exemption status, annual nonprofit tax filing requirements, and more.

1. Examples of IRS-Considered churches

For federal tax purposes, the IRS recognizes the term “church” as the following:

  • Temples, Mosques, Churches, and other places of worship.
  • Religious organizations.
  • Church conventions.
  • Church associations.
  • Auxiliaries of church.
  • All other organizations associated with the churches.

2. Is a church a tax-exempt organization?

Yes. As per the IRS, Churches come under the category of tax-exempt organizations automatically if they meet the requirements of section 501(c)(3).

Generally, If the churches meet the following requirements, the IRS will recognize them as tax-exempt organizations automatically:

  • The organization should be operated specifically for religious, educational, scientific, or other charitable purposes.
  • The church must not be involved in political activities, and lobbying must not be considered a vital organizational activity.
  • The net income or the church’s gross receipts must not benefit any private individual or shareholders.
  • The church’s activities should not be illegal or violate fundamental public policy.

They are not required to apply for tax-exempt status by filing Form 1023 or 1024.

3. Applying For 501(c)(3) Status Voluntarily

Even though the churches are not required to apply for 501(c)(3) status, they may voluntarily apply for tax-exempt status because of the following reasons.

  • The tax-exemption letter provided by the IRS provides a sense of assurance to the church leaders, members, and contributors regarding the tax-exemption status of the church and its related tax benefits.
  • Like all the other public charities, the church depends upon the public’s donations. The public can feel more assured when they know that their contributions to the church are tax-deductible.

For these reasons, the churches apply for tax-exempt status voluntarily.

How to apply for 501(c)(3) status?

Follow the steps to obtain a 501(c)(3) tax-exempt status for your church.

  • Step 1: Initially, the Organization should apply for an EIN by filing Form SS-4.
  • Step 2: After getting the EIN, the organization should file Form 1023 with the filing fee.
  • Step 3: Finally, the IRS will provide the determination letter that says the IRS recognizes your church as a tax-exempt organization.

Click here to know more about applying for the tax-exempt status.

Form 990pf mailing address

4. Church Affiliates (Integrated Auxiliaries)

Similar to churches, church affiliates are also considered tax-exempt automatically by the IRS.

What is an integrated auxiliary?

In order to be categorized as integrated auxiliaries by the IRS, the organizations are required to fulfill the below criteria.

  • Described both as an Internal Revenue Code section 501(c)(3) organization and be a public charity under Code section 509(a)(1), (2), or (3),
  • Affiliated with a church or convention or association of churches
  • Receive primary financial support from internal church sources

Note: For men's and women's organizations, seminaries, mission societies, and youth groups, the third requirement is not mandatory.

5. Exemption from 990 Filing for Churches

  • Based on IRS regulations, churches (including integrated auxiliaries and conventions or associations of churches) that meet the requirements of 501(c)(3) status are not required to file an annual return or notice with the IRS. Therefore, these organizations are exempt from filing annual returns.
  • Also, they are not subjected to automatic revocation of exemption for failure to file.

6. Do churches file a 990 Form?

To strengthen the transparency and integrity among the public and contributors, the churches may choose to voluntarily file annual information returns 990-N, 990-EZ, or 990 to the IRS based on their gross receipts.

Form 990-N

The churches with gross receipts of $50,000 or less can file Form 990-N (e-Postcard).

Form 990-EZ

The churches whose gross receipts are less than $200,000 and total assets less than $500,000 at the end of the taxable year are supposed to file Form 990-EZ.

Form 990

The churches whose gross receipts are equal to or higher than $200,000 (or) total assets equal to or greater than $500,000 at the end of the taxable year are supposed to file Form 990.

Note: The churches can also make their 990 annual return available for public inspection. Making the return for public review increases the trust in the church’s financial activities among contributors and government agencies.

Apart from this, the churches are still subject to taxes on any business income that is not substantially related to their exempt purposes.

The churches with unrelated business gross taxable income of $1,000 or more in a tax year are required to file Form 990-T, Exempt Organizations Business Income Tax Return, for that year.

Other forms the churches may require to file

Other than the 990 filing requirements, the churches may need to file Form W-2, 1099, 940, and 941.

Form 990pf mailing address

7. Choose ExpressTaxExempt to file your Form 990 for Churches

Get started with ExpressTaxExempt, to file IRS form 990 for Churches effortlessly.

All you have to do is to create a free account and add your business information. You can just choose the tax year and add your Form details. Once done, review your form and transmit it to the IRS.

Learn more about ExpressTaxExempt and why you have to choose us for filing your 990 return.

E-File Form 990-N (e-Postcard), 990-EZ, 990, 990-PF, 1120-POL, 8868 with our Software