501(c)(3): Keeping Your Nonprofit Compliant with the IRS
When starting a charitable foundation or nonprofit organization we first have to thank you for the wonderful work that you do. Then we want to make sure that you gain the correct tax exempt status.
Unfortunately, you can’t just establish yourself as a nonprofit, you have to actually apply for that status with the IRS, then work to maintain that status. But luckily you have TaxBandits here to help by providing you with all the nonprofit tax information you need. Today we’re covering how to gain 501(c)(3) tax exempt status.
How To Gain 501(c)(3) Tax-Exempt Status
First, to officially become a tax exempt organization you have to apply for your tax exempt status, and that requires knowing which type of tax exempt status you need. Status 501(c)(3) is for organizations that are religious, charitable, scientific, educational, prevent cruelty to animals or children, and for public safety testing.
Before you can apply you need to establish a nonprofit organization at a state-level. This involves filing the Articles of Incorporation. Part of this process involves obtaining a Federal tax ID number (FEIN) from the IRS.
Then you will apply for your 501(c)(3) status with the IRS by filing Form 1023, which is actually known as the application for tax exempt status. This form requires information such as when your organization was formed, it’s history, financial dates for the past 4 years, and more.
It almost feels like a survey instead of a tax form and can be quite lengthy to complete. However, if you qualify you can file Form 1023-EZ consider yourself lucky, because it’s the streamlined, faster version of Form 1023.
Remember, depending on your state you will have to apply for the Charitable Solicitations Registration before you can accept donations. This depends on what state you’re in because only 40 require this registration.
States that currently do not require this registration include Delaware, Idaho, Indiana, Iowa, Montana, Nebraska, South Dakota, and Wyoming.
501(c)(3) Compliance
In order to keep your tax exempt 501(c)(3) you will have to file Form 990 annually with the IRS. Form 990 is the Return of Organization Exempt From Income Tax. It’s primarily used by the IRS to make sure that organizations aren’t abusing their tax exempt status. Also, it’s used to make the organization’s financial information available to the public.
Form 990 is due on the 15th day 5 months after your fiscal tax year. Because most organizations run on a traditional tax year their Form 990 is due on May 15th, However, if your fiscal tax year ended in June then your deadline is on November 15!
The deadline is getting close, so head to TaxBandits.com to quickly and easily file your Form 990 online in a matter of minutes. The step-by-step guide will help you instantly complete your form and transmit it directly to the IRS.
We’re Here To Help
If you need any assistance with your 990 Form please don’t hesitate to contact the dedicated, US-based TaxBandits support team. We’re available Monday – Friday from 9 AM to 6 PM EST at 704.684.4751. We also offer live chat and 24/7 email support at support@TaxBandits.com.
