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Tax Preparation For Nonprofit & Church
Areas of Nonprofit Specialization
Churches and religious organizations are generally exempt from income tax and receive other favorable treatment under the tax law; however, certain income of a church or religious organization may be subject to tax, such as income from an unrelated business. Nonprofits are also exempt from paying sales tax and property taxes. While the income of a nonprofit organization may not be subject to federal taxes, nonprofit organizations do pay employee taxes (Social Security and Medicare) just like any for-profit company. At Phoenix Accounting Services, we can help you figure out what needs to be paid and what is tax exempt. Who Must File Charitable Taxes?
The charitable non-profits that we are familiar with are 501(c)3) organizations under the U.S. tax code. They receive income tax exemption, and their donors may take a tax deduction for their donations. The tax situation can be murky, however, since some activities that a charitable non-profit could be taxed, typically as an unrelated business activity. That could occur when a nonprofit runs a business venture to supplement its income and when that activity is not related to the nonprofit's core mission. Likewise, individuals can only take a tax deduction when they donate to a charity if they itemize their deductions on their tax return. Charitable nonprofits must apply to the IRS for 501(c)(3) status. It is not conferred automatically. And some charitable activities and groups do not apply because they are small or temporary. Some charitable organizations choose to be unincorporated nonprofit associations which often do not apply for tax exemption. Churches and religious organizations are treated a little differently than "public" charities. Nonprofits and the Tax Laws
Non-profit status may make an organization eligible for certain benefits, such as state sales, property, and income tax exemptions; however, this corporate status does not automatically grant exemption from federal income tax. To be tax exempt, most organizations must apply for recognition of exemption from the Internal Revenue Service to obtain a ruling or determination letter recognizing tax exemption. If you intend to apply to the IRS for recognition of federal tax-exempt status as a charitable organization under section 501(c)(3) of the Internal Revenue Code, you must also file articles of incorporation. To be exempt under section 501(c)(3) from the date of creation, an organization must apply within 27 months after the end of the month in which it was created. To learn about the general requirements for federal tax-exempt status, just fill our the Contact Us Form to the right. We will be happy to answer any of your questions, regarding Tax Exempt Status for Your Organization. |
Business Location #1 Phoenix Accounting Services
5501 N 7th Ave, Ste 103 Phoenix, AZ 85013 602-680-7612 Email: info@phxaccts.com Fax: 1-800-480-1551 Google Map Location
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Business Location #2
Phoenix Accounting Services
1550 E University Dr, Ste 2L, Mesa, AZ 85203 480-993-3138 Email: info@phxaccts.com Fax: 1-800-480-1551 Google Map Location
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