The Nonprofit FAQ: Taxes
Select an FAQ (15):
| Are donations to Canadian organization deductible for US taxpayers? Taxpayers with income in Canada can deduct charitable gifts to Canadian organizations. US taxpayers can only deduct gifts to US organizations from US income. |
| Can a business receive a tax-deduction for an in-kind gift? Yes, but in many cases, such gifts are treated as business expenses, which is often simpler and just as effective for the donor. |
| Can a nonprofit be a business? Many nonprofits undertake 'business' activities, and most are 'business-like' in their work. Nonprofits can't pay out profits as dividends to stockholders or as income to 'owners.' |
| Can US corporations contribute to activities outside the USA? Depending on the position of the corporate donor, contributions used for activities outside the US may or may not generate a tax benefit for the corporation. |
| General resources about nonprofit taxation See the Free Management Library at http://www.mapnp.org/library/tax/np_tax.htm |
| How is Unrelated Business Income Tax (UBIT) Calculated? UBIT is based on the corporate income tax rates. The IRS and NPOs have struggled with figuring out what is 'related' and what is not. |
| How must NPOs respond to public requests for 990s? New laws and regulations greatly expand public access. They took effect June 8, 1999. |
| Is it difficult and expensive to establish a charitable trusts? There are legal and tax complications which must be handled carefully. |
| Is the federal tax code available online? Yes. The US House of Representatives provides a copy and there are more convenient versions available online as well. |
| What are the principal differences among charitable trusts? An informal introduction to the options for planned giving. |
| What are the various tax benefits available to a donor? Charitable gifts can result in lowered taxes in many ways; here is a brief discussion of some of them. |
| What employee taxes do nonprofits pay Income taxes withheld from employees' pay and the employer's share of social security and medicare are due from any employer. Classifying someone as a contractor who isn't can be expensive (in penalties, etc). Unemployment taxes are more complicated. The IRS has explanations that can help. |
| What is Unrelated Business Income? How is it reported? Taxed? Unrelated Business Income exists under US tax law when an exempt organization receives regular revenues from activities that are not related to its exempt purpose (unless certain further exemptions apply). A separate form (the 990-T) is used to report UBI and to calculate whether tax (UBIT) is due. |
| What kinds of gifting by individual donors are most common? A classification of various kinds of gifts. |
| What kinds of gifts would be most useful for new organizations? Which should fundraisers concentrate on first? |