The advantages of starting a nonprofit corporation can be very appealing. Not only do these organizations exist for good causes, but they also enjoy big tax benefits. That typically includes being exempt from paying federal and state taxes on any income earned, unlike for-profit corporations. But first, these entities must meet several unique requirements set forth by the IRS. Miser Wealth Partners are very experienced in helping a variety of nonprofit organizations adhere to all the unique stipulations that apply to them. With so much to consider, it can be easier than you think to miss something when filing nonprofit taxes and protecting your filing status.
What should I consider when completing my nonprofit tax filing?
Below, we’ve outlined the most common things nonprofit organizations tend to overlook when it comes to their filing status:
- Compliance with nonprofit regulations: Nonprofit organizations have specific regulations and requirements that govern their tax-exempt status. It is important to understand and comply with the rules and regulations set by the IRS and other relevant regulatory bodies. This includes adhering to guidelines related to public reporting, recordkeeping, board governance, and charitable activities.
- Unrelated business income tax (UBIT): If a non-profit engages in activities that generate income unrelated to its tax-exempt purpose, it may be subject to UBIT. It is important to properly identify and report such income and consider any exemptions or deductions that may apply.
- Donor acknowledgment and substantiation: The IRS has specific requirements for acknowledging and documenting charitable contributions. Non-profits should ensure that they provide appropriate written acknowledgment to donors for tax-deductible contributions and maintain adequate records to substantiate these contributions.
- Form 990 reporting: Nonprofit organizations are generally required to file Form 990 with the IRS annually. However, they may overlook the complexity of this reporting requirement and the level of detail required. It is important to understand the various schedules and sections of Form 990 and ensure accurate and complete reporting of the organization’s financial information, governance structure, activities, and compensation.
- State and local tax obligations: Non-profits sometimes focus solely on federal tax obligations and overlook state and local tax requirements. Depending on the jurisdiction, non-profits may be subject to state income tax, sales tax, property tax, or other local taxes. It is essential to understand and fulfill these obligations to maintain compliance and protect the organization’s tax-exempt status.
- Compliance with lobbying and political activities rules: The IRS has specific guidelines on the extent to which non-profits can engage in lobbying and political activities while maintaining their tax-exempt status. It is important to understand these rules and properly track and report any activities in these areas.
- Document retention and recordkeeping: It’s important for nonprofits to give sufficient attention to document retention and recordkeeping requirements by maintaining accurate and complete records of financial transactions, board meetings, governance policies, employee records, and other pertinent documents. Proper recordkeeping helps demonstrate compliance, facilitate tax filing, and provide a basis for any potential audits or reviews.
Why choose Miser Wealth Partners to help with your nonprofit tax filings?
Avoiding these and any other potential oversights is imperative for nonprofit organizations to maintain their status and protect their bottom line. The experienced professionals at Miser Wealth Partners consist of nonprofit tax specialists, accountants, and attorneys to help your organization with whatever it needs. We can provide guidance on compliance, assist with tax filings, and offer advice on best practices for protecting your nonprofit’s tax-exempt status and promoting long-term compliance and effective governance.
Where can I get help with nonprofit tax filings in East Tennessee?
When it comes to the help you need ensuring your nonprofit entity remains in good standing with the IRS and continues to operate without a hitch, look no further than Miser Wealth Partners. Our experienced team can help you meet all the requirements involved for your nonprofit so you can focus on your organization’s overall benevolent mission. Call us at (865) 281-1616 or click here to set up a meeting at your earliest convenience.