Nonprofits and the IRS
Federal tax law provides tax benefits to nonprofit organizations that qualify as exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. Most organizations must apply to the IRS to attain that status.
Why incorporate as a nonprofit organization under section 501(c)(3)?
- 501(c)(3) nonprofit organizations are exempt from corporate income taxes on profits from activities related to the organization’s charitable, scientific or educational purpose.
- 501(c)(3) nonprofits qualify for many public and private grants.
- Donors can deduct gifts to 501(c)(3) nonprofits on their federal and state tax income returns.
- Nonprofit status establishes legal protection that separate personal assets from corporate activities.
Tax Information
- IRS Publication 4220, Applying for 501(c)(3) Tax-Exempt Status – Includes general guidelines for organizations seeking tax-exempt status under section 501(c)(3) of the IRC, such as references to the statute, Treasury regulations, other IRS publications that explain the requirements for tax-exempt status and IRS forms with instructions.
- IRS Publication 4221, Compliance Guide for 501(c)(3) Tax-Exempt Organizations
- IRS Publication 557, Tax-Exempt Status for Your Organization – Includes rules and procedures for organizations applying for tax exemption under section 501(c)(3). For assistance on 501(c)(3) status, you may also want to consult a tax adviser.
- IRS Publication 598, Tax on Unrelated Business Income of Exempt Organizations (UBIT)
- Tax-Exempt Organizations E-file Requirements
- Tax Exempt Organizations Tax Kit
Links to IRS nonprofit tax forms
- Form 990, Return of Organization Exempt from Income Tax
- Form 990-EZ, Short Form Return of Organization Exempt from Income Tax
- Form 1023, Application for Recognition of Exemption for 501(c)(3) Charitable Organizations
- Form 1024, Application for Recognition of Exemption for 501(a) Organizations
- Form 1120, U.S. Income Tax Return for Certain Political Organizations
