I worked for a preschool that is affiliated with a church and apparently they are non-profit. I was told after losing my job that I could not receive unemployment because they are non profit. But I wasn’t paid in cash. I was paid by direct deposit and taxes were taken out of my paycheck. I got a legitimate W2 so I don’t understand why I won’t get unemployment. Can you please explain to me why I am not eligible in a way I can understand?
I worked there for over a year if that makes any difference.
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I Got A W2 But My Employer Doesn’t Pay Taxes?
Posted on May 11, 2013.
I’d apply for the benefits
Money collected at the church is non-profit, money collected and then paid to you as a daycare worker is not non-profit. They pay their taxes, what they may not pay is unemployment tax. Unemployment tax is based on the number of employees you have. Our company in Texas is not required to pay because there is only 2 or 3 of us. It would depend upon why you were let go, First off, and then how many people actually worked at the daycare. You can apply, the state can’t stop you, if your employer is the one saying you can’t, I wouldn’t listen, they just don’t want to do the paperwork involved. You also need to have some proof on your side as to why you were let go, they will go back and ask, and more often then not, so that the employer doesn’t have to pay, they lie about the reason. Federal Unemployment is different than State.
Churches are allowed to opt out of payroll taxes. That puts the onus on you to pay self-employment taxes at the federal level. Since they are not paying State or Federal unemployment taxes, you are not eligible for benefits.
A FEW churches pay their employees well enough that the sting is not so harsh — a friend was paid $25 an hour for janitorial and child care work — but it’s been my experience that most of them take advantage of the situation to the financial detriment of their employees.
You could argue your case that the preschool is not properly a tax-exempt entity as its business extends beyond the tax free status of a church or non-profit. That would certainly clean their clock if you prevailed, but it’s the ONLY way that you have any hope of getting benefits.
Wages paid by non-profit organizations are exempt from the Federal Unemployment Tax Act, and depending on your state’s law may be exempt from state unemployment as well. Being a non-profit does not exempt them from withholding payroll taxes and paying the employer portion of FICA (social security & medicare), which is why taxes are still withheld and you receive a W-2. Since it appears your state also has an exemption on unemployment for non-profits, that would make you ineligible to receive benefits.
what is it taxes are withheld or they are not?
you mention direct deposit and taxes withheld but you also say your W-2 shows no taxes withheld
To add insult to injury, when you file your taxes, *you* will be the one filling out the schedule SE to pay the payroll taxes they didn’t pay.
Wages paid by the church is not subject to unemployment tax so employees are not eligible for unemployment benefits. That’ s just the way it is.
There’s more involved here.
I work with an organization that’s a 501(c)3 non-profit, not church related. Employees get a W-2. We pay into unemployment, and employees are eligible to collect if laid off.