If you’re running a charity or nonprofit organization then it’s important you stay in control of your taxes to ensure you keep your exempt status.
Tax Software for Nonprofit Organizations is an organization that provides latest software for nonprofit organizations. The best part of it is that it’s free to use. It has all the needed functionalities with no limitations. Having this sublime tool at your disposal means that you can file all your taxes without having to worry about overpaying or underpaying your taxes. How is that possible? This software not only saves time and effort, but also helps you reduce the possibility of mistakes when filing taxes.
There are many advantages to using tax software for nonprofits organizations. Tax software will help you save time and money by asking simple questions about your businesses accounting records to provide you with a complete end-of-year report. This report provides the number of donations, the amount donated, the amount of revenue, overhead expenses to determine what your organization qualifies as a 501(c)(3) non profit organization.
IRS Resources
The IRS is the best starting point for useful tax resources for charities and nonprofits. Under the Internal Revenue Service (IRS) tax code, subsection 501(c), nonprofits are exempt from federal incomes taxes. However, just creating a nonprofit organization does not make it tax-exempt automatically. There is a process that must be followed.
IRS: Tax Exemption Process and Forms:
The first steps in the process are to incorporate in a state and obtain an Employer Identification Number (EIN) by filing form SS-4 with the IRS. After these steps, most nonprofits will need to file form 1023 with the IRS and provide Articles of Incorporation to explain the purpose and function of the nonprofit, which the IRS will consider in its review. Nonprofits intending to operate under section 501(C)(4) for promotion of social welfare must file Form 8976.
IRS: Annual Filing and Forms:
Most tax-exempt organizations are still required to file annual income tax returns in some variant of Form 990, a form that provides financial information about the organization to the public. Failing to file or filing late can still incur penalties. Failing to file three years in a row will result in the loss of an organization’s tax-exempt status, too. Nonprofits will file Form 990, Form 990-N if the organization’s gross receipts are $50,000 or less, Form 990-EZ if the organization’s gross receipts are less than $200,000 and total assets less than $500,000 (with some exceptions), or Form 990-PF if the organization is a private foundation. Those filing a Form 990 (sometimes 990-EZ and 990-PF) will also include a variety of schedules. Many churches and other religious organizations are exempt from filing.
Tax-Exempt Organization Search:
Sometimes, donors may ask that a nonprofit or charity prove its nonprofit status and good standing. The IRS provides a way that the organization can demonstrate that its federal tax returns have been submitted via the Tax Exempt Organization Search. This search feature is also useful for organizations who just need to know if their tax returns have been received and accepted by the IRS. Users can utilize the search tool to find information about an organization’s eligibility for tax-deductible contributions, to find out if an organization has filed Form 990-N, or if it has had its tax-exemption revoked.
Compliance Guide :
The IRS provides a Compliance Guide for 501(c)(3) Public Charities. The guide includes information about activities that could cause an organization to lose exempt status; information returns, tax returns, and notices required by the IRS; records that must be kept; changes that must be reported; information about resources; and so on. This guide is a must-read for those responsible for public charities.
State Links for Exempt Organizations:
Because tax return filing requirements for each state differ, it’s essential that the nonprofit board of directors understand what must be filed on an annual basis. To help you, the IRS also maintains a site with State Links for Exempt Organizations. These links connect users with state government websites providing information for tax-exempt organizations, which prevents having to search state databases on your own. Information includes requirements for registration each state, taxation information, and more.
Information and Technology Resources
Tax Information for Nonprofits at the Free Management Library:
The Free Management Library is just what it sounds like: a repository of free online articles to help with “personal, professional, business and organizational development.” The library is more than just a collection of articles, though. It’s a massive site with curated content that includes tools for developing a learning plan, connecting with other members, general resources, and so on. One page in the library is devoted to Tax Information for Nonprofits. The page includes links to information about taxes, payroll, record-keeping, getting tax-exempt status, preparing and filing 990 forms, and more.
National Council of Nonprofits:
The National Council of Nonprofits provides resources and advocacy for charitable nonprofits in the United States. As such, the council also provides information about federal filing requirements for nonprofit organizations. The page includes information about the various 990 forms and a helpful list of FAQs about filing the 990-N. The page also provides background information on the 990s, filing deadlines, and a good list of additional resources.
BoardSource:
Designed to help nonprofits in maintaining and improving their day to operations, Boardsource has tools to help identify an organization’s shortcomings and rectify them. Tools include their board self-assessment, the BoardSource Exchange, educational resources, and an on-demand certification program, along with a library of resources. Of particular interest might be the downloadable Form 990 Checklist, which can guide a nonprofit board in key areas.
TechSoup:
TechSoup provides a Nonprofit Tech Marketplace where nonprofits can purchase software very inexpensively, including Intuit products. The product catalog includes all the software a nonprofit could need and more from Microsoft Office to Adobe to Intuit QuickBooks 2020. Hardware from Lenovo, Dell, and others can be acquired at a discount. Nonprofits can also access tech help and consultations. TechSoup even offers on-demand courses that address nonprofit technology needs. Webinars address a variety of topics important to nonprofits, as well. Nonprofits have to verify eligibility to acquire products and services. While TechSoup in and of itself isn’t necessarily a tax resource, it is a resource for acquiring QuickBooks at a significantly reduced rate, and good accounting practices make the tax return preparation process quite a lot easier.
Tax Return Filing Resources
Do Nonprofit Organizations File Tax Returns?
Yes! Nonprofit organizations that have been granted tax exemption by the IRS are required to file an IRS Form 990, annual information return. You might wonder why, given that such organizations are exempt from paying taxes anyway. To put it in layman’s terms – your nonprofit organization is required to ‘justify its tax-exempt status. In other words, the annual tax return of a 501(c)(3) organization proves to the IRS that the nonprofit is living up to its charitable purpose.
Unfortunately, there are always some who might take advantage of a nonprofit’s tax-exempt status for personal financial gain. For example, an individual could create a shell company and submit invoices to obtain payments for services not rendered or deliver goods or services marked-up excessively. It is for reasons such as these that larger nonprofits, and nonprofits that are recipients of grants, are required to have an independent accountant perform an audit.
Form 990 Online:
A federal e-file participant since 2004, Form 990 Online facilitates free and low-cost electronic and mail-in tax return filing for nonprofits and charities as a function of the Civic Leadership Project, which is focused on building communities and strengthening the network of nonprofit organizations that serve them. Users can file Form 990, Form 990-EZ, or Form 8868, which is the request for an extension, along with all schedules and supporting forms; currently, Form 990-PF is not supported. Form 990 Online facilitates year-over-year filing in that it saves key information in its database and automatically transfers it to the next year’s return. The Quick Menu allows the user to navigate easily from one form to the next and find state information. Plus, the Verify Return feature ensures that important elements, including the balance sheet, have been completed. Users needing to e-file state returns for Hawaii, Michigan, and New York can do so; all other states must mail their state-required forms. Costs are reasonable for even the smallest organizations since it’s free to file any return with less than $100,000 in gross revenue. The highest usage fee, which applies to nonprofits with more than $50 million in gross revenue, is $190.
File 990:
File 990 addresses the needs of two types of nonprofits: those with revenues under $200,000 and those that function as umbrella organizations managing multiple chapters. Smaller nonprofits can also use File 990, which facilitates electronic filing of both the 990-N and the 990-EZ. Fees range from $49.99 (990-N) to $69.99 (990-EZ) for individual organizations, but File 990 also sends reminders to its customers when it’s time to file the next year’s return. And, unlike other providers, File 990 includes an enterprise pricing option for multi-chapter nonprofits. For umbrella organizations that file for each chapter, File 990 automatically imports information from the IRS and allows submission of the 990s all at once. And, for umbrella organizations that monitor submission, File 990 provides accurate information regarding who is up to date and who needs a nudge.
ExpressTaxExempt:
For organizations that need to file more specialized federal tax returns, such as Form 1120-POL and Form 990-PF, as well as all other federal nonprofit forms, ExpressTaxExempt provides a low-cost option. ExpressTaxExempt also facilitates importing prior year information, filing amended returns, and inviting others to view forms before they are submitted. Pricing ranges from $19.90 per return for Form 990-N up to $109.90 for a combined Form 8868 (extension) and 990-PF. Tax professionals who are filing on behalf of nonprofit organizations receive discounted pricing, too. All in all, the pricing is reasonable, even for very small nonprofits. All forms and statements are supported, and organizations can even now e-file required California forms. Plus, users can choose between using an interview form or the actual tax forms, which can help nonprofit boards with limited tax preparation experience to self-file.
Conclusion:
Tax Software is a tax preparation software designed for nonprofit organizations. It computes the taxable income and computes tax and comes up with a balance that can be paid and can be withheld by the employer.
If you are a nonprofit organization tax-exempt by the federal government or state government, you are probably filing annual tax returns with obligations to submit certain financial and other information. The Internal Revenue Service (IRS) requires tax-exempt organizations to submit an annual information return identifying your contributors and detailing your programs and finances.