Employment tax exceptions and exclusions for exempt organizations

Like other employers, exempt organizations that compensate workers are generally subject to employment taxes when they compensate workers. The following exceptions may apply, however:

• Exemption from FUTA (unemployment) tax for section 501(c)(3) organizations
• An elective exemption from FICA (Social Security and Medicare) for churches and certain church-controlled organizations
• Exemption of payments for certain services performed by ministers or members of religious orders from FICA and FUTA taxes
• Exclusion from FICA of compensation paid to students

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