If you and/or your business are making year-end contributions to charity, you must keep in mind certain tax law provisions. Provisions regarding proper reporting for individual and business taxpayers and certain Individual Retirement Arrangement (IRA) owners seeking to claim tax deductible donations are of special interest. The IRS offers valuable tips on these provisions in its newsroom article, “IRS Offers Tips for Year-End Donations” at http://www.irs.gov/newsroom/article/0,,id=201076,00.html.

Firstly, the IRS describes provisions outlining rules for donating clothing and household items, and guidelines for monetary donations. To help taxpayers plan their holiday-season and year-end giving, the IRS offers the following useful reminders:

• Contributions are deductible in the year made.
• Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. The searchable online listing of qualified organizations can be found at IRS.gov under Search for Charities.
• For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions.
• For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property.
• The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale.
• If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.

Secondly, the IRS details provisions regarding how IRA owners, age 70 ½ or over, may contribute up to $100,000 per year to an eligible charitable organization tax-free. See IRS Publication 590, Individual Retirement Arrangements (IRAs), for more information on qualified charitable distributions at: http://www.irs.gov/pub/irs-pdf/p590.pdf.

Another useful resource is the online mini-course, "Can I Deduct My Charitable Contribution?" (a 20-minute presentation) found at: http://www.stayexempt.org/mini-courses/canIDeduc/player.html

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Labels: charitable contribution, charitable distribution, charitable donation, IRA, IRS, tax deductible donation, tax exempt organization

The IRS Tax Exempt Organizations Division has recently made available on their website a list of valuable resources to help managers, founders, board members and organizers of new nonprofit organizations learn more about tax exemption issues. The resource list entitled, “ABC’s for Exempt Organizations” may be found at http://www.irs.gov/charities/article/0,,id=187787,00.html. Resources include:

• Life Cycle of an Exempt Organization Helpful information about points of intersection between tax-exempt organizations and the IRS, including access to explanatory information and forms that an organization may need to file with the IRS. Separate life cycle sites are provided for different types of nonprofit organizations.
• Applying for Tax-Exempt Status (brochure) Criteria and procedures for applying for 501(c)(3) tax-exempt status.
• Compliance Guide for 501(c)(3) Public Charities (brochure) Activities that may jeopardize a charity's exempt status, federal tax filings, recordkeeping, changes to be reported to the IRS, required public disclosures, and IRS resources. Separate guides are available for private foundations.
• Frequently Asked Questions About Tax-Exempt Organizations
• EO Forms and Publications IRS forms, publications, and internal training materials relating to tax-exempt organizations.
• Employment Taxes for Exempt Organizations Links to information about employment taxes for tax-exempt organizations.
• Schedule of Events Workshops and conferences for exempt organizations.
• On-Line Workshops and Mini-Courses An on-line version of IRS workshop for small and mid-sized exempt organizations, and mini-courses on applying for exemption, foundation status, annual return preparation (Form 990), deductibility of contributions, and resources for exempt organizations.
• Retirement Plan Information for Exempt Organizations Information and resources for tax-exempt organizations interested in establishing retirement plans for employees.
• Exempt Organizations Products and Services Navigator (brochure) Resources for exempt organizations.
• Annual Electronic Filing Requirement for Small Exempt Organizations Form 990-N (e-Postcard)

Labels: 501c3, attorney, IRS, lawyer, nonprofit, tax exempt, tax exempt status

If your 501c nonprofit tax-exempt organization has annual gross receipts normally $25,000 or less, it most likely has a new annual filing requirement: Form 990-N. Before the Pension Protection Act of 2006 recently added this filing requirement, small nonprofits had no obligation to file an annual return. The IRS says that this filing requirement was added to ensure that they and potential donors have current information about the organization. The first Form 990-N’s started becoming due in May, 2008 for tax years ending on or after December 31, 2007. Small nonprofit organizations must file Form 990-N annually to avoid penalties and the possible loss of tax-exempt status.

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Labels: 501c3, 990N, attorney, IRS, lawyer, nonprofit, tax-exempt