A 501c3 tax status allows qualifying nonprofit organizations to be exempt from paying federal income tax on its profits. Beena Soiefer, nonprofit services
Greg Corombos: Our guest this week on Expert Insights is Beena Soiefer, nonprofit services
Beena Soiefer: My pleasure.
Greg Corombos: Well let's start with the simple definition What is a 501(c)3 status and who can qualify?
Beena Soiefer: A 501(c)3 status is the IRS tax status that certain nonprofits can qualify for. It allows the qualifying organization to be exempt from paying federal income tax on its profits, if it has any, and allows donors to claim a deduction on their personal taxes for the amount donated to the organization.
Greg Corombos: What else do people need to know?
Beena Soiefer: Well, when it comes to forming the nonprofit, you first need to make sure that the purpose itself is one that qualifies for 501(c)3 status if that's the direction you're going to go. So if you're looking at a purpose that is charitable, educational, religious, scientific, something along those lines, you'll likely qualify for the 501(c)3 status. So that's one point. If you're looking at other types of nonprofit
Greg Corombos: What can the 501(c)3 status provide to organizations.
Beena Soiefer: Well, it'll also exempt the nonprofit from certain
Greg Corombos: Alright, so once you decide that this might be a good idea for you, what are the steps to actually apply for the 501(c)3 nonprofit status.
Beena Soiefer: The first step is
Greg Corombos: Well, that's nice. So once the status has been approved by the IRS, what happens?
Beena Soiefer: Then the organization can go ahead and apply for its state and local level exemptions and any of the other benefits that we mentioned. Some jurisdictions will allow the organization to apply for these beforehand. They're typically done after the 501(c)3 has been approved. It's a much more straightforward and simplified process at that point.
Greg Corombos: All right, we're talking with Beena Soiefer, nonprofit services and finance manager at V Corp Services. And Beena once you're officially a 501(c)3 nonprofit entity, what are the requirements then specifically when it comes to tax filing.
Beena Soiefer: The most organizations, with the exception of churches and some other church-related organizations, are required to file...it's known as a 990 series return.
Greg Corombos: In addition to taxes, what other filing requirements are necessary.
Beena Soiefer: Most states have a registration requirement if the organization will be soliciting within the state. Most states have a state charities bureau that has an annual filing requirement. So if an organization is looking to solicit funds in a certain state, they would register with the charities bureau there and file a report usually on an annual basis. Some states it's a biennial, where they provide the details of their fundraising activities during the year.
Greg Corombos: Beena, terrific information. A lot of helpful tips there for folks considering this option which could be very beneficial to their business. Thanks very much for your time today.
Beena Soiefer: A pleasure.
Greg Corombos: Beena Soiefer is nonprofit services and finance manager at V Corp Services. I'm Greg Columbus reporting for Expert Insights.
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