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How to do Tax Planning for Non-Profit Organizations?

Non Profit Organizations help in the overall development of the Society that includes Charitable Organizations, Churches, Universities, Hospitals etc. Depending upon the various factors Non-Profit making organizations may be given the status of Tax-Exempt from federal taxes. Therefore it is very essential for all the Nonprofit Organizations to do proper tax planning before filling the tax return.

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How to do Tax Planning for Non-Profit Organizations?

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  1. Tax Planning for Non-Profit Organizations

  2. Tax Planning for Non-Profit Organizations • Non-profit Organizations help in the overall development of the Society that may include Charitable Organizations, Churches, Universities, Hospitals etc. in the United States. Depending upon the various factors, Non-profit making organizations may be given the status of Tax Exempt from federal taxes. If you’ve filed the tax return & paid the tax, check the refund status with the IRS.

  3. TaX PLANNING FOR Non-profit organization may INCLUDE ACTIONS SUCH AS: • 1- Communal Services: Continuous provision of communal services that proves to be very helpful to the community or area of operation. • 2- Development of Community Members: Such Organization plan to offer the best services to its community for the benefit and development of the members of this community. • 3- Selling of Goods and Services: The Non-Profit Organizations plans to continue applying for the donations and grants on a periodic basis or it will be engaging into selling of goods and services.

  4. Tax Exempt Benefits of Nonprofits • The Internal Revenue Service grant Tax-Exempt Status to a variety of Organizations including state and federal credit unions, title holding companies, social welfare organizations, social and recreation clubs, fraternal organizations and child care organizations. For such organizations there are many tax-exempt statuses available, including 501c1, 501c2, 501c3. The 501cs is often the most preferred status for nonprofit organizations. Some important benefits are: • 1- No Tax Obligations: Having a Tax-Exempt Status makes non-profit organization free from paying federal, state and local taxes on all the income flowing into your organization. In such type of organizations income are generated from donors, government grants and money generated through fundraisers. With no tax obligations, you have more money available to spend towards your cause.

  5. Tax PLANNING IS VERY IMPORTANT FOR NON-PROFIT ORGANIZATION

  6. 2- Helps in Increasing Donations: If an organization has Tax-Exempt Status it helps in getting more donations. If your organization is not tax exempt, a donor will think twice before donating, especially if the donation amount is bigger. When your organization carries a Tax-Exempt Status you can also apply for public and private grants. Preparing a non-profit tax return is very essential for such organizations. 3- Psychological Advantage: The Organization may have a general psychological advantage due to the autonomity.

  7. 4- Instills Responsibility's:Filling of data on 501c3 tax return exempt organizations consumes time, its costly, creates high complexity levels and instills responsibility's up to the organization management. 5- Non-Profit Organization's Control: The Non-Profit Organization can then become autonomous from all persons. As much as they may have been sympathetic on the NPO they may now not have any controls or powers over it.

  8. Process of Acquiring a Charitable Exempt Status

  9. To acquire a Charitable Exempt Status a Non-Profit Organization should go through several processes: • Sometimes there may be need to hire a legal officer who may help make proper decisions and provides a clear and proper guidance throughout the process. • Make important decisions whether there is need to acquire a Tax Exempt Status or not.

  10. Deciding on the type of Non-Profit Organization that fits the purpose designated. • There may be need to apply for Non-Profit Organization's in consideration of the Organization or by-laws of the region of operation. • Follow up to be up to date with the regulations regarding the renewal and presentations of reports.

  11. Follow Us Company: Affluent Financial Services LLC Email Id:info@affluentcpa.com  Website:https://www.affluentcpa.com/

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