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Filing Previous Years Taxes

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Filing Previous Years Taxes

Filing previous years taxes 19. Filing previous years taxes   Education- Related Adjustments Table of Contents Introduction Useful Items - You may want to see: Student Loan Interest DeductionStudent Loan Interest Defined Can You Claim the Deduction How Much Can You Deduct How Do You Figure the Deduction Tuition and Fees DeductionCan You Claim the Deduction What Expenses Qualify Who Is an Eligible Student Who Can Claim a Dependent's Expenses How Much Can You Deduct Educator Expenses Introduction This chapter discusses the education-related adjustment you can deduct in figuring your adjusted gross income. Filing previous years taxes This chapter covers the student loan interest deduction, tuition and fees deduction, and the deduction for educator expenses. Filing previous years taxes Useful Items - You may want to see: Publication 970 Tax Benefits for Education Student Loan Interest Deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. Filing previous years taxes However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Filing previous years taxes For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. Filing previous years taxes This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2013. Filing previous years taxes Table 19-1 summarizes the features of the student loan interest deduction. Filing previous years taxes Table 19-1. Filing previous years taxes Student Loan Interest Deduction at a Glance Do not rely on this table alone. Filing previous years taxes Refer to the text for more details. Filing previous years taxes Feature Description Maximum benefit You can reduce your income subject to tax by up to $2,500. Filing previous years taxes Loan qualifications Your student loan: •  must have been taken out solely to pay qualified education expenses, and   • cannot be from a related person or made under a qualified employer plan. Filing previous years taxes Student qualifications The student must be: • you, your spouse, or your dependent, and   • enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. Filing previous years taxes Time limit on deduction You can deduct interest paid during the remaining period of your student loan. Filing previous years taxes Phaseout The amount of your deduction depends on your income level. Filing previous years taxes Student Loan Interest Defined Student loan interest is interest you paid during the year on a qualified student loan. Filing previous years taxes It includes both required and voluntary interest payments. Filing previous years taxes Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent (defined in chapter 3) when you took out the loan, Paid or incurred within a reasonable period of time before or after you took out the loan, and For education provided during an academic period when the student is an eligible student. Filing previous years taxes Loans from the following sources are not qualified student loans. Filing previous years taxes A related person. Filing previous years taxes A qualified employer plan. Filing previous years taxes Exceptions. Filing previous years taxes   For purposes of the student loan interest deduction, the following are exceptions to the general rules for dependents. Filing previous years taxes An individual can be your dependent even if you are the dependent of another taxpayer. Filing previous years taxes An individual can be your dependent even if the individual files a joint return with a spouse. Filing previous years taxes An individual can be your dependent even if the individual had gross income for the year that was equal to or more than the exemption amount for the year ($3,900 for 2013). Filing previous years taxes    Reasonable period of time. Filing previous years taxes   Qualified education expenses are treated as paid or incurred within a reasonable period of time before or after you take out the loan if they are paid with the proceeds of student loans that are part of a federal postsecondary education loan program. Filing previous years taxes   Even if not paid with the proceeds of that type of loan, the expenses are treated as paid or incurred within a reasonable period of time if both of the following requirements are met. Filing previous years taxes The expenses relate to a specific academic period. Filing previous years taxes The loan proceeds are disbursed within a period that begins 90 days before the start of that academic period and ends 90 days after the end of that academic period. Filing previous years taxes   If neither of the above situations applies, the reasonable period of time is determined based on all the relevant facts and circumstances. Filing previous years taxes Academic period. Filing previous years taxes   An academic period includes a semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Filing previous years taxes In the case of an educational institution that uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Filing previous years taxes Eligible student. Filing previous years taxes   This is a student who was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential. Filing previous years taxes Enrolled at least half-time. Filing previous years taxes   A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study. Filing previous years taxes   The standard for what is half of the normal full-time work load is determined by each eligible educational institution. Filing previous years taxes However, the standard may not be lower than any of those established by the U. Filing previous years taxes S. Filing previous years taxes Department of Education under the Higher Education Act of 1965. Filing previous years taxes Related person. Filing previous years taxes   You cannot deduct interest on a loan you get from a related person. Filing previous years taxes Related persons include: Your spouse, Your brothers and sisters, Your half brothers and half sisters, Your ancestors (parents, grandparents, etc. Filing previous years taxes ), Your lineal descendants (children, grandchildren, etc. Filing previous years taxes ), and Certain corporations, partnerships, trusts, and exempt organizations. Filing previous years taxes Qualified employer plan. Filing previous years taxes   You cannot deduct interest on a loan made under a qualified employer plan or under a contract purchased under such a plan. Filing previous years taxes Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. Filing previous years taxes They include amounts paid for the following items. Filing previous years taxes Tuition and fees. Filing previous years taxes Room and board. Filing previous years taxes Books, supplies, and equipment. Filing previous years taxes Other necessary expenses (such as transportation). Filing previous years taxes The cost of room and board qualifies only to the extent that it is not more than: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or If greater, the actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Filing previous years taxes Eligible educational institution. Filing previous years taxes   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Filing previous years taxes S. Filing previous years taxes Department of Education. Filing previous years taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Filing previous years taxes   Certain educational institutions located outside the United States also participate in the U. Filing previous years taxes S. Filing previous years taxes Department of Education's Federal Student Aid (FSA) programs. Filing previous years taxes   For purposes of the student loan interest deduction, an eligible educational institution also includes an institution conducting an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Filing previous years taxes   An educational institution must meet the above criteria only during the academic period(s) for which the student loan was incurred. Filing previous years taxes The deductibility of interest on the loan is not affected by the institution's subsequent loss of eligibility. Filing previous years taxes    The educational institution should be able to tell you if it is an eligible educational institution. Filing previous years taxes Adjustments to qualified education expenses. Filing previous years taxes   You must reduce your qualified education expenses by certain tax-free items (such as the tax-free part of scholarships and fellowships). Filing previous years taxes See chapter 4 of Publication 970 for details. Filing previous years taxes Include as Interest In addition to simple interest on the loan, certain loan origination fees, capitalized interest, interest on revolving lines of credit, and interest on refinanced student loans can be student loan interest if all other requirements are met. Filing previous years taxes Loan origination fee. Filing previous years taxes   In general, this is a one-time fee charged by the lender when a loan is made. Filing previous years taxes To be deductible as interest, the fee must be for the use of money rather than for property or services (such as commitment fees or processing costs) provided by the lender. Filing previous years taxes A loan origination fee treated as interest accrues over the life of the loan. Filing previous years taxes Capitalized interest. Filing previous years taxes    This is unpaid interest on a student loan that is added by the lender to the outstanding principal balance of the loan. Filing previous years taxes Interest on revolving lines of credit. Filing previous years taxes   This interest, which includes interest on credit card debt, is student loan interest if the borrower uses the line of credit (credit card) only to pay qualified education expenses. Filing previous years taxes See Qualified Education Expenses , earlier. Filing previous years taxes Interest on refinanced student loans. Filing previous years taxes   This includes interest on both: Consolidated loans—loans used to refinance more than one student loan of the same borrower, and Collapsed loans—two or more loans of the same borrower that are treated by both the lender and the borrower as one loan. Filing previous years taxes If you refinance a qualified student loan for more than your original loan and you use the additional amount for any purpose other than qualified education expenses, you cannot deduct any interest paid on the refinanced loan. Filing previous years taxes Voluntary interest payments. Filing previous years taxes   These are payments made on a qualified student loan during a period when interest payments are not required, such as when the borrower has been granted a deferment or the loan has not yet entered repayment status. Filing previous years taxes Do Not Include as Interest You cannot claim a student loan interest deduction for any of the following items. Filing previous years taxes Interest you paid on a loan if, under the terms of the loan, you are not legally obligated to make interest payments. Filing previous years taxes Loan origination fees that are payments for property or services provided by the lender, such as commitment fees or processing costs. Filing previous years taxes Interest you paid on a loan to the extent payments were made through your participation in the National Health Service Corps Loan Repayment Program (the “NHSC Loan Repayment Program”) or certain other loan repayment assistance programs. Filing previous years taxes For more information, see Student Loan Repayment Assistance in chapter 5 of Publication 970. Filing previous years taxes Can You Claim the Deduction Generally, you can claim the deduction if all of the following requirements are met. Filing previous years taxes Your filing status is any filing status except married filing separately. Filing previous years taxes No one else is claiming an exemption for you on his or her tax return. Filing previous years taxes You are legally obligated to pay interest on a qualified student loan. Filing previous years taxes You paid interest on a qualified student loan. Filing previous years taxes Interest paid by others. Filing previous years taxes   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest. Filing previous years taxes See chapter 4 of Publication 970 for more information. Filing previous years taxes No Double Benefit Allowed You cannot deduct as interest on a student loan any amount that is an allowable deduction under any other provision of the tax law (for example, home mortgage interest). Filing previous years taxes How Much Can You Deduct Your student loan interest deduction for 2013 is generally the smaller of: $2,500, or The interest you paid in 2013. Filing previous years taxes However, the amount determined above is phased out (gradually reduced) if your MAGI is between $60,000 and $75,000 ($125,000 and $155,000 if you file a joint return). Filing previous years taxes You cannot take a student loan interest deduction if your MAGI is $75,000 or more ($155,000 or more if you file a joint return). Filing previous years taxes For details on figuring your MAGI, see chapter 4 of Publication 970. Filing previous years taxes How Do You Figure the Deduction Generally, you figure the deduction using the Student Loan Interest Deduction Worksheet in the Form 1040 or Form 1040A instructions. Filing previous years taxes However, if you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from sources within Puerto Rico, you must complete Worksheet 4-1 in chapter 4 of Publication 970. Filing previous years taxes To help you figure your student loan interest deduction, you should receive Form 1098-E, Student Loan Interest Statement. Filing previous years taxes Generally, an institution (such as a bank or governmental agency) that received interest payments of $600 or more during 2013 on one or more qualified student loans must send Form 1098-E (or acceptable substitute) to each borrower by January 31, 2014. Filing previous years taxes For qualified student loans taken out before September 1, 2004, the institution is required to include on Form 1098-E only payments of stated interest. Filing previous years taxes Other interest payments, such as certain loan origination fees and capitalized interest, may not appear on the form you receive. Filing previous years taxes However, if you pay qualifying interest that is not included on Form 1098-E, you can also deduct those amounts. Filing previous years taxes For information on allocating payments between interest and principal, see chapter 4 of Publication 970. Filing previous years taxes To claim the deduction, enter the allowable amount on Form 1040, line 33, or Form 1040A, line 18. Filing previous years taxes Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse, or your dependent(s). Filing previous years taxes You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. Filing previous years taxes The qualified expenses must be for higher education, as explained later under What Expenses Qualify . Filing previous years taxes The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. Filing previous years taxes Table 19-2 summarizes the features of the tuition and fees deduction. Filing previous years taxes You may be able to take a credit for your education expenses instead of a deduction. Filing previous years taxes You can choose the one that will give you the lower tax. Filing previous years taxes See chapter 35, Education Credits, for details about the credits. Filing previous years taxes Can You Claim the Deduction The following rules will help you determine if you can claim the tuition and fees deduction. Filing previous years taxes Who Can Claim the Deduction Generally, you can claim the tuition and fees deduction if all three of the following requirements are met. Filing previous years taxes You paid qualified education expenses of higher education in 2013 for academic periods beginning in 2013 and those beginning in the first three months of 2014. Filing previous years taxes You paid the education expenses for an eligible student. Filing previous years taxes The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption (defined in chapter 3) on your tax return. Filing previous years taxes Qualified education expenses are defined under What Expenses Qualify . Filing previous years taxes Eligible students are defined later under Who Is an Eligible Student . Filing previous years taxes Who Cannot Claim the Deduction You cannot claim the tuition and fees deduction if any of the following apply. Filing previous years taxes Your filing status is married filing separately. Filing previous years taxes Another person can claim an exemption for you as a dependent on his or her tax return. Filing previous years taxes You cannot take the deduction even if the other person does not actually claim that exemption. Filing previous years taxes Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). Filing previous years taxes You (or your spouse) were a nonresident alien for any part of 2013 and the nonresident alien did not elect to be treated as a resident alien for tax purposes. Filing previous years taxes More information on nonresident aliens can be found in Publication 519, U. Filing previous years taxes S. Filing previous years taxes Tax Guide for Aliens. Filing previous years taxes You or anyone else claims an American opportunity or lifetime learning credit in 2013 with respect to expenses of the student for whom the qualified education expenses were paid. Filing previous years taxes However, a state tax credit will not disqualify you from claiming a tuition and fees deduction. Filing previous years taxes Table 19-2. Filing previous years taxes Tuition and Fees Deduction at a Glance Do not rely on this table alone. Filing previous years taxes Refer to the text for more details. Filing previous years taxes Question   Answer What is the maximum benefit?   You can reduce your income subject to tax by up to $4,000. Filing previous years taxes Where is the deduction taken?   As an adjustment to income on Form 1040, line 34, or Form 1040A, line 19. Filing previous years taxes For whom must the expenses be paid?   A student enrolled in an eligible educational institution who is either: you, your spouse, or your dependent for whom you claim an exemption. Filing previous years taxes What tuition and fees are deductible?   Tuition and fees required for enrollment or attendance at an eligible postsecondary educational institution, but not including personal, living, or family expenses, such as room and board. Filing previous years taxes What Expenses Qualify The tuition and fees deduction is based on qualified education expenses you pay for yourself, your spouse, or a dependent for whom you claim an exemption on your tax return. Filing previous years taxes Generally, the deduction is allowed for qualified education expenses paid in 2013 in connection with enrollment at an institution of higher education during 2013 or for an academic period (defined earlier under Student Loan Interest Deduction ) beginning in 2013 or in the first 3 months of 2014. Filing previous years taxes Payments with borrowed funds. Filing previous years taxes   You can claim a tuition and fees deduction for qualified education expenses paid with the proceeds of a loan. Filing previous years taxes Use the expenses to figure the deduction for the year in which the expenses are paid, not the year in which the loan is repaid. Filing previous years taxes Treat loan payments sent directly to the educational institution as paid on the date the institution credits the student's account. Filing previous years taxes Student withdraws from class(es). Filing previous years taxes   You can claim a tuition and fees deduction for qualified education expenses not refunded when a student withdraws. Filing previous years taxes Qualified Education Expenses For purposes of the tuition and fees deduction, qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Filing previous years taxes Eligible educational institution. Filing previous years taxes   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. Filing previous years taxes S. Filing previous years taxes Department of Education. Filing previous years taxes It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Filing previous years taxes The educational institution should be able to tell you if it is an eligible educational institution. Filing previous years taxes   Certain educational institutions located outside the United States also participate in the U. Filing previous years taxes S. Filing previous years taxes Department of Education's Federal Student Aid (FSA) programs. Filing previous years taxes Academic period. Filing previous years taxes    An academic period is any quarter, semester, trimester, or any other period of study as reasonably determined by an eligible educational institution. Filing previous years taxes If an eligible educational institution uses credit hours and does not have academic terms, each payment period may be treated as an academic period. Filing previous years taxes Related expenses. Filing previous years taxes   Student-activity fees and expenses for course-related books, supplies, and equipment are included in qualified education expenses for the tuition and fees deduction only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Filing previous years taxes Prepaid expenses. Filing previous years taxes   Qualified education expenses paid in 2013 for an academic period that begins in the first three months of 2014 can be used in figuring the tuition and fees deduction. Filing previous years taxes See Academic period, earlier. Filing previous years taxes For example, if you pay $2,000 in December 2013 for qualified tuition for the 2014 winter quarter that begins in January 2014, you can use that $2,000 in figuring the tuition and fees deduction for 2013 only if you meet all the other requirements. Filing previous years taxes    You cannot use any amount you paid in 2012 or 2014 to figure the qualified education expenses you use to figure your 2013 tuition and fees deduction. Filing previous years taxes No Double Benefit Allowed You cannot do any of the following. Filing previous years taxes Deduct qualified education expenses you deduct under any other provision of the law, for example, as a business expense. Filing previous years taxes Deduct qualified education expenses for a student on your income tax return if you or anyone else claims an American opportunity or lifetime learning credit for that same student in the same year. Filing previous years taxes Deduct qualified education expenses that have been used to figure the tax-free portion of a distribution from a Coverdell education savings account (ESA) or a qualified tuition program (QTP). Filing previous years taxes For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Filing previous years taxes See Figuring the Taxable Portion of a Distribution in chapter 7 (Coverdell ESA) and chapter 8 (QTP) of Publication 970. Filing previous years taxes Deduct qualified education expenses that have been paid with tax-free interest on U. Filing previous years taxes S. Filing previous years taxes savings bonds (Form 8815). Filing previous years taxes See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Filing previous years taxes Deduct qualified education expenses that have been paid with tax-free educational assistance such as a scholarship, grant, or employer-provided educational assistance. Filing previous years taxes See Adjustments to qualified education expenses, later. Filing previous years taxes Adjustments to qualified education expenses. Filing previous years taxes   For each student, reduce the qualified education expenses paid by or on behalf of that student under the following rules. Filing previous years taxes The result is the amount of adjusted qualified education expenses for each student. Filing previous years taxes Tax-free educational assistance. Filing previous years taxes   For tax-free educational assistance you received in 2013, reduce the qualified educational expenses for each academic period by the amount of tax-free educational assistance to that academic period. Filing previous years taxes See Academic period, earlier. Filing previous years taxes   This includes: The tax-free part of scholarships and fellowships, including Pell grants (see chapter 1 of Publication 970), The tax-free part of any employer-provided educational assistance (see chapter 11 of Publication 970), Veterans' educational assistance (see chapter 1 of Publication 970), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. Filing previous years taxes Generally, any scholarship or fellowship you receive is treated as tax-free educational assistance. Filing previous years taxes However, a scholarship or fellowship is not treated as tax-free educational assistance to the extent you include it in gross income (if you are required to file a tax return) for the year the scholarship or fellowship is received and either: The scholarship or fellowship (or any part of it) must be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Filing previous years taxes 970, chapter 1. Filing previous years taxes The scholarship or fellowship (or any part of it) may be applied (by its terms) to expenses (such as room and board) other than qualified education expenses as defined in Qualified education expenses in Pub. Filing previous years taxes 970, chapter 1. Filing previous years taxes You may be able to increase the combined value of your tuition and fees deduction and certain educational assistance if you include some or all of the educational assistance in income in the year it is received. Filing previous years taxes For details, see Adjustments to Qualified Education Expenses in chapter 6 of Pub. Filing previous years taxes 970. Filing previous years taxes Some tax-free educational assistance received in 2013 may be treated as a refund of qualified education expenses paid in 2013. Filing previous years taxes This tax-free educational assistance is any tax-free educational assistance received by you or anyone else after 2013 for qualified education expenses paid on behalf of a student in 2013 (or attributable to enrollment at an eligible educational institution during 2013). Filing previous years taxes If this tax-free educational assistance is received after 2013 but before you file your 2013 income tax return, see Refunds received after 2013 but before your income tax return is filed, later. Filing previous years taxes If this tax-free educational assistance is received after 2013 and after you file your 2013 income tax return, see Refunds received after 2013 and after your income tax return is filed, later. Filing previous years taxes Refunds. Filing previous years taxes   A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or may require you to include some or all of the refund in your gross income for the year the refund is received. Filing previous years taxes See chapter 6 of Pub. Filing previous years taxes 970 for more information. Filing previous years taxes Some tax-free educational assistance received after 2013 may be treated as a refund. Filing previous years taxes See Tax-free educational assistance, earlier. Filing previous years taxes Refunds received in 2013. Filing previous years taxes    For each student, figure the adjusted qualified education expenses for 2013 by adding all the qualified education expenses paid in 2013 and subtracting any refunds of those expenses received from the eligible educational institution during 2013. Filing previous years taxes Refunds received after 2013 but before your income tax return is filed. Filing previous years taxes   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received before you file your 2013 income tax return, reduce the amount of qualified education expenses for 2013 by the amount of the refund. Filing previous years taxes Refunds received after 2013 and after your income tax return is filed. Filing previous years taxes   If you receive a refund after 2013 of qualified education expenses you paid in 2013 and the refund is received after you file your 2013 income tax return, you may need to include some or all of the refund in your gross income for the year the refund is received. Filing previous years taxes See chapter 6 of Pub. Filing previous years taxes 970 for more information. Filing previous years taxes Coordination with Coverdell education savings accounts and qualified tuition programs. Filing previous years taxes    Reduce your qualified education expenses by any qualified education expenses used to figure the exclusion from gross income of (a) interest received under an education savings bond program, or (b) any distribution from a Coverdell education savings account or qualified tuition program (QTP). Filing previous years taxes For a QTP, this applies only to the amount of tax-free earnings that were distributed, not to the recovery of contributions to the program. Filing previous years taxes Amounts that do not reduce qualified education expenses. Filing previous years taxes   Do not reduce qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance, or A withdrawal from the student's personal savings. Filing previous years taxes   Do not reduce the qualified education expenses by any scholarship or fellowship reported as income on the student's tax return in the following situations. Filing previous years taxes The use of the money is restricted, by the terms of the scholarship or fellowship, to costs of attendance (such as room and board) other than qualified education expenses. Filing previous years taxes The use of the money is not restricted. Filing previous years taxes Expenses That Do Not Qualify Qualified education expenses do not include amounts paid for: Insurance, Medical expenses (including student health fees), Room and board, Transportation, or Similar personal, living, or family expenses. Filing previous years taxes This is true even if the amount must be paid to the institution as a condition of enrollment or attendance. Filing previous years taxes Sports, games, hobbies, and noncredit courses. Filing previous years taxes   Qualified education expenses generally do not include expenses that relate to any course of instruction or other education that involves sports, games or hobbies, or any noncredit course. Filing previous years taxes However, if the course of instruction or other education is part of the student's degree program, these expenses can qualify. Filing previous years taxes Comprehensive or bundled fees. Filing previous years taxes   Some eligible educational institutions combine all of their fees for an academic period into one amount. Filing previous years taxes If you do not receive, or do not have access to, an allocation showing how much you paid for qualified education expenses and how much you paid for personal expenses, such as those listed above, contact the institution. Filing previous years taxes The institution is required to make this allocation and provide you with the amount you paid (or were billed) for qualified education expenses on Form 1098-T, Tuition Statement. Filing previous years taxes See How Do You Figure the Deduction , later, for more information about Form 1098-T. Filing previous years taxes Who Is an Eligible Student For purposes of the tuition and fees deduction, an eligible student is a student who is enrolled in one or more courses at an eligible educational institution (defined earlier). Filing previous years taxes Who Can Claim a Dependent's Expenses Generally, in order to claim the tuition and fees deduction for qualified education expenses for a dependent, you must: Have paid the expenses, and Claim an exemption for the student as a dependent. Filing previous years taxes Table 19-3 summarizes who can claim the deduction. Filing previous years taxes How Much Can You Deduct The maximum tuition and fees deduction in 2013 is $4,000, $2,000, or $0, depending on the amount of your MAGI. Filing previous years taxes For details on figuring your MAGI, see chapter 6 of Publication 970. Filing previous years taxes How Do You Figure the Deduction Figure the deduction using Form 8917. Filing previous years taxes To help you figure your tuition and fees deduction, you should receive Form 1098-T, Tuition Statement. Filing previous years taxes Generally, an eligible educational institution (such as a college or university) must send Form 1098-T (or acceptable substitute) to each enrolled student by January 31, 2014. Filing previous years taxes To claim the deduction, enter the allowable amount on Form 1040, line 34, or Form 1040A, line 19, and attach your completed Form 8917. Filing previous years taxes Table 19-3. Filing previous years taxes Who Can Claim a Dependent's Expenses Do not rely on this table alone. Filing previous years taxes See Who Can Claim a Dependent's Expenses in chapter 6 of Publication 970. Filing previous years taxes IF your dependent is an eligible student and you. Filing previous years taxes . Filing previous years taxes . Filing previous years taxes AND. Filing previous years taxes . Filing previous years taxes . Filing previous years taxes THEN. Filing previous years taxes . Filing previous years taxes . Filing previous years taxes claim an exemption for your dependent you paid all qualified education expenses for your dependent only you can deduct the qualified education expenses that you paid. Filing previous years taxes Your dependent cannot take a deduction. Filing previous years taxes claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Filing previous years taxes do not claim an exemption for your dependent you paid all qualified education expenses no one is allowed to take a deduction. Filing previous years taxes do not claim an exemption for your dependent your dependent paid all qualified education expenses no one is allowed to take a deduction. Filing previous years taxes Educator Expenses If you were an eligible educator in 2013, you can deduct on Form 1040, line 23, or Form 1040A, line 16, up to $250 of qualified expenses you paid in 2013. Filing previous years taxes If you and your spouse are filing jointly and both of you were eligible educators, the maximum deduction is $500. Filing previous years taxes However, neither spouse can deduct more than $250 of his or her qualified expenses on Form 1040, line 23, or Form 1040A, line 16. Filing previous years taxes You may be able to deduct expenses that are more than the $250 (or $500) limit on Schedule A (Form 1040), line 21. Filing previous years taxes Eligible educator. Filing previous years taxes   An eligible educator is a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked in a school for at least 900 hours during a school year. Filing previous years taxes Qualified expenses. Filing previous years taxes   Qualified expenses include ordinary and necessary expenses paid in connection with books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. Filing previous years taxes An ordinary expense is one that is common and accepted in your educational field. Filing previous years taxes A necessary expense is one that is helpful and appropriate for your profession as an educator. Filing previous years taxes An expense does not have to be required to be considered necessary. Filing previous years taxes   Qualified expenses do not include expenses for home schooling or for nonathletic supplies for courses in health or physical education. Filing previous years taxes   You must reduce your qualified expenses by the following amounts. Filing previous years taxes Excludable U. Filing previous years taxes S. Filing previous years taxes series EE and I savings bond interest from Form 8815. Filing previous years taxes See Figuring the Tax-Free Amount in chapter 10 of Publication 970. Filing previous years taxes Nontaxable qualified tuition program earnings or distributions. Filing previous years taxes See Figuring the Taxable Portion of a Distribution in chapter 8 of Publication 970. Filing previous years taxes Nontaxable distribution of earnings from a Coverdell education savings account. Filing previous years taxes See Figuring the Taxable Portion of a Distribution in chapter 7 of Publication 970. Filing previous years taxes Any reimbursements you received for these expenses that were not reported to you in box 1 of your Form W-2. Filing previous years taxes Prev  Up  Next   Home   More Online Publications
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Publication 17, Your Federal Income Tax

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The Filing Previous Years Taxes

Filing previous years taxes 3. Filing previous years taxes   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. Filing previous years taxes Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. Filing previous years taxes Certain contracts held by a charitable remainder trust. Filing previous years taxes Excise Taxes. Filing previous years taxes Indoor tanning services. Filing previous years taxes Application for Recognition of ExemptionPolitical activity. Filing previous years taxes Private delivery service. Filing previous years taxes Amendments to organizing documents required. Filing previous years taxes How to show reasonable action and good faith. Filing previous years taxes Not acting reasonably and in good faith. Filing previous years taxes Prejudicing the interest of the Government. Filing previous years taxes Procedure for requesting extension. Filing previous years taxes More information. Filing previous years taxes Organizations Not Required To File Form 1023 Articles of OrganizationOrganizational Test Dedication and Distribution of Assets Educational Organizations and Private SchoolsEducational Organizations Private Schools Organizations Providing InsuranceCharitable Risk Pools Other Section 501(c)(3) OrganizationsCharitable Organizations Religious Organizations Scientific Organizations Literary Organizations Amateur Athletic Organizations Prevention of Cruelty to Children or Animals Private Foundations and Public CharitiesPrivate Foundations Public Charities Private Operating Foundations Lobbying ExpendituresLobbying expenditures. Filing previous years taxes Grass roots expenditures. Filing previous years taxes Lobbying nontaxable amount. Filing previous years taxes Grass roots nontaxable amount. Filing previous years taxes Organization that no longer qualifies. Filing previous years taxes Tax on organization. Filing previous years taxes Tax on managers. Filing previous years taxes Taxes on organizations. Filing previous years taxes Taxes on managers. Filing previous years taxes Political expenditures. Filing previous years taxes Correction of expenditure. Filing previous years taxes Introduction An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. Filing previous years taxes Religious. Filing previous years taxes Charitable. Filing previous years taxes Scientific. Filing previous years taxes Testing for public safety. Filing previous years taxes Literary. Filing previous years taxes Educational. Filing previous years taxes Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter). Filing previous years taxes The prevention of cruelty to children or animals. Filing previous years taxes To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. Filing previous years taxes A trust is a fund or foundation and will qualify. Filing previous years taxes However, an individual or a partnership will not qualify. Filing previous years taxes Examples. Filing previous years taxes   Qualifying organizations include: Nonprofit old-age homes, Parent-teacher associations, Charitable hospitals or other charitable organizations, Alumni associations, Schools, Chapters of the Red Cross, Boys' or Girls' Clubs, and Churches. Filing previous years taxes Child care organizations. Filing previous years taxes   The term educational purposes includes providing for care of children away from their homes if substantially all the care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. Filing previous years taxes Instrumentalities. Filing previous years taxes   A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). Filing previous years taxes Examples of a qualifying instrumentality might include state schools, universities, or hospitals. Filing previous years taxes However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. Filing previous years taxes A state or municipality itself does not qualify for exemption. Filing previous years taxes Topics - This chapter discusses: Contributions to 501(c)(3) organizations, Applications for recognition of exemption, Articles of Organization, Educational organizations and private schools, Organizations providing insurance, Other section 501(c)(3) organizations, Private foundations and public charities, and Lobbying expenditures. Filing previous years taxes Useful Items - You may want to see: Forms (and Instructions) 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code See chapter 6 for information about getting publications and forms. Filing previous years taxes Contributions to 501(c)(3) Organizations Contributions to domestic organizations described in this chapter, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return. Filing previous years taxes Fundraising events. Filing previous years taxes   If the donor receives something of value in return for the contribution, a common occurrence with fundraising efforts, part or all of the contribution may not be deductible. Filing previous years taxes This may apply to fundraising activities such as charity balls, bazaars, banquets, auctions, concerts, athletic events, and solicitations for membership or contributions when merchandise or benefits are given in return for payment of a specified minimum contribution. Filing previous years taxes   If the donor receives or expects to receive goods or services in return for a contribution to your organization, the donor cannot deduct any part of the contribution unless the donor intends to, and does, make a payment greater than the fair market value of the goods or services. Filing previous years taxes If a deduction is allowed, the donor can deduct only the part of the contribution, if any, that is more than the fair market value of the goods or services received. Filing previous years taxes You should determine in advance the fair market value of any goods or services to be given to contributors and tell them, when you publicize the fundraising event or solicit their contributions, how much is deductible and how much is for the goods or services. Filing previous years taxes See Disclosure of Quid Pro Quo Contributions in chapter 2. Filing previous years taxes Exemption application not filed. Filing previous years taxes   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. Filing previous years taxes Separate fund—contributions that are deductible. Filing previous years taxes   An organization that is exempt from federal income tax other than as an organization described in section 501(c)(3) can, if it desires, establish a fund, separate and apart from its other funds, exclusively for religious, charitable, scientific, literary, or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. Filing previous years taxes   If the fund is organized and operated exclusively for these purposes, it may qualify for exemption as an organization described in section 501(c)(3), and contributions made to it will be deductible as provided by section 170. Filing previous years taxes A fund with these characteristics must be organized in such a manner as to prohibit the use of its funds upon dissolution, or otherwise, for the general purposes of the organization creating it. Filing previous years taxes Personal benefit contracts. Filing previous years taxes   Generally, charitable deductions will not be allowed for a transfer to, or for the use of, a section 501(c)(3) or (c)(4) organization if in connection with the transfer: The organization directly or indirectly pays, or previously paid, a premium on a personal benefit contract for the transferor, or There is an understanding or expectation that anyone will directly or indirectly pay a premium on a personal benefit contract for the transferor. Filing previous years taxes   A personal benefit contract with respect to the transferor is any life insurance, annuity, or endowment contract, if any direct or indirect beneficiary under the contract is the transferor, any member of the transferor's family, or any other person designated by the transferor. Filing previous years taxes Certain annuity contracts. Filing previous years taxes   If an organization incurs an obligation to pay a charitable gift annuity, and the organization purchases an annuity contract to fund the obligation, individuals receiving payments under the charitable gift annuity will not be treated as indirect beneficiaries if the organization owns all of the incidents of ownership under the contract, is entitled to all payments under the contract, and the timing and amount of the payments are substantially the same as the timing and amount of payments to each person under the obligation (as such obligation is in effect at the time of the transfer). Filing previous years taxes Certain contracts held by a charitable remainder trust. Filing previous years taxes   An individual will not be considered an indirect beneficiary under a life insurance, annuity, or endowment contract held by a charitable remainder annuity trust or a charitable remainder unitrust solely by reason of being entitled to the payment if the trust owns all of the incidents of ownership under the contract, and the trust is entitled to all payments under the contract. Filing previous years taxes Excise tax. Filing previous years taxes   If the premiums are paid in connection with a transfer for which a deduction is not allowable under the deduction denial rule, without regard to when the transfer to the charitable organization was made, an excise tax will be applied that is equal to the amount of the premiums paid by the organization on any life insurance, annuity, or endowment contract. Filing previous years taxes The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. Filing previous years taxes Excise Taxes. Filing previous years taxes   A charitable organization liable for excise taxes must file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. Filing previous years taxes Generally, the due date for filing Form 4720 occurs on the fifteenth day of the fifth month following the close of the organization's tax year. Filing previous years taxes Indoor tanning services. Filing previous years taxes   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. Filing previous years taxes For more information, go to IRS. Filing previous years taxes gov and select Affordable Care Act Tax Provisions. Filing previous years taxes Application for Recognition of Exemption This discussion describes certain information to be provided upon application for recognition of exemption by all organizations created for any of the purposes described earlier in this chapter. Filing previous years taxes For example, the application must include a conformed copy of the organization's articles of incorporation, as discussed under Articles of Organization , later in this chapter. Filing previous years taxes See the organization headings that follow for specific information your organization may need to provide. Filing previous years taxes Form 1023. Filing previous years taxes   Your organization must file its application for recognition of exemption on Form 1023. Filing previous years taxes See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. Filing previous years taxes Some organizations are not required to file Form 1023. Filing previous years taxes See Organizations Not Required To File Form 1023, later. Filing previous years taxes    Additional information to help you complete your application can be found online. Filing previous years taxes Go to Exemption Requirement – Section 501(c)(3) Organizations and select the link at the bottom of the Web page for step by step help with the application process. Filing previous years taxes See Exemption Requirements - Section 501(c)(3) Organizations. Filing previous years taxes   Form 1023 and accompanying statements must show that all of the following are true. Filing previous years taxes The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. Filing previous years taxes ) specified in the introduction to this chapter. Filing previous years taxes No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. Filing previous years taxes You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. Filing previous years taxes The organization will not, as a substantial part of its activities, attempt to influence legislation (unless it elects to come under the provisions allowing certain lobbying expenditures) or participate to any extent in a political campaign for or against any candidate for public office. Filing previous years taxes See Political activity, next, and Lobbying Expenditures , near the end of this chapter. Filing previous years taxes Political activity. Filing previous years taxes   If any of the activities (whether or not substantial) of your organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization will not qualify for tax-exempt status under section 501(c)(3). Filing previous years taxes Such participation or intervention includes the publishing or distributing of statements. Filing previous years taxes   Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. Filing previous years taxes Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c)(3), while other so-called voter education activities may be prohibited. Filing previous years taxes Effective date of exemption. Filing previous years taxes   Most organizations described in this chapter that were organized after October 9, 1969, will not be treated as tax exempt unless they apply for recognition of exemption by filing Form 1023. Filing previous years taxes These organizations will not be treated as tax exempt for any period before they file Form 1023, unless they file the form within 27 months from the end of the month in which they were organized. Filing previous years taxes If the organization files the application within this 27-month period, the organization's exemption will be recognized retroactively to the date it was organized. Filing previous years taxes Otherwise, exemption will be recognized only from the date of receipt. Filing previous years taxes The date of receipt is the date of the U. Filing previous years taxes S. Filing previous years taxes postmark on the cover in which an exemption application is mailed or, if no postmark appears on the cover, the date the application is stamped as received by the IRS. Filing previous years taxes Private delivery service. Filing previous years taxes   If a private delivery service designated by the IRS, rather than the U. Filing previous years taxes S. Filing previous years taxes Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. Filing previous years taxes The following private delivery services have been designated by the IRS. Filing previous years taxes DHL Express (DHL): DHL “Same Day” Service. Filing previous years taxes Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. Filing previous years taxes United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Filing previous years taxes M. Filing previous years taxes , UPS Worldwide Express Plus, and UPS Worldwide Express. Filing previous years taxes Amendments to organizing documents required. Filing previous years taxes   If an organization is required to alter its activities or to make substantive amendments to its organizing document, the ruling or determination letter recognizing its exempt status will be effective as of the date the changes are made. Filing previous years taxes If only a nonsubstantive amendment is made, exempt status will be effective as of the date it was organized, if the application was filed within the 15-month period, or the date the application was filed. Filing previous years taxes Extensions of time for filing. Filing previous years taxes   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. Filing previous years taxes Automatic 12-month extension. Filing previous years taxes Organizations will receive an automatic 12-month extension if they file an application for recognition of exemption with the IRS within 12 months of the original deadline. Filing previous years taxes To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. Filing previous years taxes 9100-2. Filing previous years taxes ” Discretionary extensions. Filing previous years taxes An organization that fails to file a Form 1023 within the extended 12-month period will be granted an extension to file if it submits evidence (including affidavits) to establish that: It acted reasonably and in good faith, and Granting a discretionary extension will not prejudice the interests of the government. Filing previous years taxes How to show reasonable action and good faith. Filing previous years taxes   An organization acted reasonably and showed good faith if at least one of the following is true. Filing previous years taxes The organization requests relief before its failure to file is discovered by the IRS. Filing previous years taxes The organization failed to file because of intervening events beyond its control. Filing previous years taxes The organization exercised reasonable diligence (taking into account the complexity of the return or issue and the organization's experience in these matters) but was not aware of the filing requirement. Filing previous years taxes The organization reasonably relied upon the written advice of the IRS. Filing previous years taxes The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. Filing previous years taxes An organization cannot rely on the advice of a tax professional if it knows or should know that he or she is not competent to render advice on filing exemption applications or is not aware of all the relevant facts. Filing previous years taxes Not acting reasonably and in good faith. Filing previous years taxes   An organization has not acted reasonably and in good faith under the following circumstances. Filing previous years taxes It seeks to change a return position for which an accuracy-related penalty has been or could be imposed at the time the relief is requested. Filing previous years taxes It was informed of the requirement to file and related tax consequences, but chose not to file. Filing previous years taxes It uses hindsight in requesting relief. Filing previous years taxes The IRS will not ordinarily grant an extension if specific facts have changed since the due date that makes filing an application advantageous to an organization. Filing previous years taxes Prejudicing the interest of the Government. Filing previous years taxes   Prejudice to the interest of the Government results if granting an extension of time to file to an organization results in a lower total tax liability for the years to which the filing applies than would have been the case if the organization had filed on time. Filing previous years taxes Before granting an extension, the IRS can require the organization requesting it to submit a statement from an independent auditor certifying that no prejudice will result if the extension is granted. Filing previous years taxes The interests of the Government are ordinarily prejudiced if the tax year in which the application should have been filed (or any tax year that would have been affected had the filing been timely) are closed by the statute of limitations before relief is granted. Filing previous years taxes The IRS can condition a grant of relief on the organization providing the IRS with a statement from an independent auditor certifying that the interests of the Government are not prejudiced. Filing previous years taxes Procedure for requesting extension. Filing previous years taxes   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. Filing previous years taxes A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. Filing previous years taxes Any documents relevant to the application. Filing previous years taxes An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. Filing previous years taxes If the organization relied on a tax professional's advice, the affidavit must describe the engagement and responsibilities of the professional and the extent to which the organization relied on him or her. Filing previous years taxes This affidavit must be accompanied by a dated declaration, signed by an individual who has personal knowledge of the facts and circumstances, who is authorized to act for the organization, which states, “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. Filing previous years taxes ” Detailed affidavits from individuals having knowledge or information about the events that led to the failure to make the application and to the discovery of that failure. Filing previous years taxes This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. Filing previous years taxes The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. Filing previous years taxes These affidavits must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. Filing previous years taxes ” The organization must state whether the returns for the tax year in which the application should have been filed or any tax years that would have been affected by the application had it been timely made are being examined by the IRS, an appeals office, or a federal court. Filing previous years taxes The organization must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the organization's request for relief is pending. Filing previous years taxes The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. Filing previous years taxes   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. Filing previous years taxes Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. Filing previous years taxes More information. Filing previous years taxes   For more information about these procedures, see Regulations sections 301. Filing previous years taxes 9100-1, 301. Filing previous years taxes 9100-2, 301. Filing previous years taxes 9100-3, Revenue Procedure 2013-4, section 6. Filing previous years taxes 04, 2013-1 I. Filing previous years taxes R. Filing previous years taxes B. Filing previous years taxes 126, and Revenue Procedure 2013-8, 2013-1 I. Filing previous years taxes R. Filing previous years taxes B. Filing previous years taxes 237. Filing previous years taxes See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. Filing previous years taxes Notification from the IRS. Filing previous years taxes   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. Filing previous years taxes Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. Filing previous years taxes These include: Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. Filing previous years taxes Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). Filing previous years taxes These organizations are exempt automatically if they meet the requirements of section 501(c)(3). Filing previous years taxes Filing Form 1023 to establish exemption. Filing previous years taxes   If the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it should file Form 1023. Filing previous years taxes By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. Filing previous years taxes A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. Filing previous years taxes Private foundations. Filing previous years taxes   See Private Foundations and Public Charities, later in this chapter, for more information about the additional notice required from an organization in order for it not to be presumed to be a private foundation and for the additional information required from a private foundation claiming to be an operating foundation. Filing previous years taxes Gross receipts test. Filing previous years taxes   For purposes of the gross receipts test, an organization normally does not have more than $5,000 annually in gross receipts if: During its first tax year the organization received gross receipts of $7,500 or less, During its first 2 years the organization had a total of $12,000 or less in gross receipts, and In the case of an organization that has been in existence for at least 3 years, the total gross receipts received by the organization during the immediately preceding 2 years, plus the current year, are $15,000 or less. Filing previous years taxes   An organization with gross receipts more than the amounts in the gross receipts test, unless otherwise exempt from filing Form 1023, must file a Form 1023 within 90 days after the end of the period in which the amounts are exceeded. Filing previous years taxes For example, an organization's gross receipts for its first tax year were less than $7,500, but at the end of its second tax year its gross receipts for the 2-year period were more than $12,000. Filing previous years taxes The organization must file Form 1023 within 90 days after the end of its second tax year. Filing previous years taxes   If the organization had existed for at least 3 tax years and had met the gross receipts test for all prior tax years but fails to meet the requirement for the current tax year, its tax-exempt status for the prior years will not be lost even if Form 1023 is not filed within 90 days after the close of the current tax year. Filing previous years taxes However, the organization will not be treated as a section 501(c)(3) organization for the period beginning with the current tax year and ending with the filing of Form 1023. Filing previous years taxes Example. Filing previous years taxes   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. Filing previous years taxes It was incorporated on January 1, 2009, and files returns on a calendar-year basis. Filing previous years taxes It did not file a Form 1023. Filing previous years taxes The organization's gross receipts during the years 2009 through 2012 were as follows: 2009 $3,600 2010 2,900 2011 400 2012 12,600   The organization's total gross receipts for 2009, 2010, and 2011 were $6,900. Filing previous years taxes Therefore, it did not have to file Form 1023 and is exempt for those years. Filing previous years taxes However, for 2010, 2011, and 2012 the total gross receipts were $15,900. Filing previous years taxes Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. Filing previous years taxes If it does not file within this time period, it will not be exempt under section 501(c)(3) for the period beginning with tax year 2012 ending when the Form 1023 is received by the IRS. Filing previous years taxes The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. Filing previous years taxes   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. Filing previous years taxes See the procedures for this extension discussed earlier. Filing previous years taxes Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. Filing previous years taxes This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. Filing previous years taxes Organizational Test The articles of organization must limit the organization's purposes to one or more of those described at the beginning of this chapter and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further one or more of those purposes. Filing previous years taxes These conditions for exemption are referred to as the organizational test. Filing previous years taxes Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. Filing previous years taxes Therefore, the organizational test may be met if the purposes stated in the articles of organization are limited in some way by reference to section 501(c)(3). Filing previous years taxes The requirement that your organization's purposes and powers must be limited by the articles of organization is not satisfied if the limit is contained only in the bylaws or other rules or regulations. Filing previous years taxes Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. Filing previous years taxes Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. Filing previous years taxes In interpreting an organization's articles, the law of the state where the organization was created is controlling. Filing previous years taxes If an organization contends that the terms of its articles have a different meaning under state law than their generally accepted meaning, such meaning must be established by a clear and convincing reference to relevant court decisions, opinions of the state attorney general, or other appropriate state authorities. Filing previous years taxes The following are examples illustrating the organizational test. Filing previous years taxes Example 1. Filing previous years taxes Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). Filing previous years taxes These articles appropriately limit the organization's purposes. Filing previous years taxes The organization meets the organizational test. Filing previous years taxes Example 2. Filing previous years taxes An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. Filing previous years taxes The organization will not be properly limited as to its purposes since all research is not scientific. Filing previous years taxes The organization does not meet the organizational test. Filing previous years taxes Example 3. Filing previous years taxes An organization's articles state that its purpose is to receive contributions and pay them over to organizations that are described in section 501(c)(3) and exempt from taxation under section 501(a). Filing previous years taxes The organization meets the organizational test. Filing previous years taxes Example 4. Filing previous years taxes If a stated purpose in the articles is the conduct of a school of adult education and its manner of operation is described in detail, such a purpose will be satisfactorily limited. Filing previous years taxes Example 5. Filing previous years taxes If the articles state the organization is formed for charitable purposes, without any further description, such language ordinarily will be sufficient since the term charitable has a generally accepted legal meaning. Filing previous years taxes On the other hand, if the purposes are stated to be charitable, philanthropic, and benevolent, the organizational requirement will not be met since the terms philanthropic and benevolent have no generally accepted legal meaning and, therefore, the stated purposes may, under the laws of the state, permit activities that are broader than those intended by the exemption law. Filing previous years taxes Example 6. Filing previous years taxes If the articles state an organization is formed to promote American ideals, or to foster the best interests of the people, or to further the common welfare and well-being of the community, without any limitation or provision restricting such purposes to accomplishment only in a charitable manner, the purposes will not be sufficiently limited. Filing previous years taxes Such purposes are vague and may be accomplished other than in an exempt manner. Filing previous years taxes Example 7. Filing previous years taxes A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. Filing previous years taxes A hospital may or may not be exempt depending on the manner in which it is operated. Filing previous years taxes Example 8. Filing previous years taxes An organization that is expressly empowered by its articles to carry on social activities will not be sufficiently limited as to its power, even if its articles state that it is organized and will be operated exclusively for charitable purposes. Filing previous years taxes Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. Filing previous years taxes This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the Federal Government or to a state or local government for a public purpose. Filing previous years taxes If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. Filing previous years taxes Dedication. Filing previous years taxes   To establish that your organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision ensuring their distribution for an exempt purpose in the event of dissolution. Filing previous years taxes Although reliance can be placed upon state law to establish permanent dedication of assets for exempt purposes, your organization's application probably can be processed much more rapidly if its articles of organization include a provision ensuring permanent dedication of assets for exempt purposes. Filing previous years taxes Distribution. Filing previous years taxes   Revenue Procedure 82-2, 1982-1 C. Filing previous years taxes B. Filing previous years taxes 367, identifies the states and circumstances in which the IRS will not require an express provision for the distribution of assets upon dissolution in the articles of organization. Filing previous years taxes The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. Filing previous years taxes   If a named beneficiary is to be the distributee, it must be one that would qualify and would be exempt within the meaning of section 501(c)(3) at the time the dissolution takes place. Filing previous years taxes Since the named beneficiary at the time of dissolution may not be qualified, may not be in existence, or may be unwilling or unable to accept the assets of the dissolving organization, a provision should be made for distribution of the assets for one or more of the purposes specified in this chapter in the event of any such contingency. Filing previous years taxes Sample articles of organization. Filing previous years taxes   See sample articles of organization in the Appendix in the back of this publication. Filing previous years taxes Educational Organizations and Private Schools If your organization wants to obtain recognition of exemption as an educational organization, you must submit complete information as to how your organization carries on or plans to carry on its educational activities, such as by conducting a school, by panels, discussions, lectures, forums, radio and television programs, or through various cultural media such as museums, symphony orchestras, or art exhibits. Filing previous years taxes In each instance, you must explain by whom and where these activities are or will be conducted and the amount of admission fees, if any. Filing previous years taxes You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. Filing previous years taxes If you are organized to conduct a school, you must submit full information regarding your tuition charges, number of faculty members, number of full-time and part-time students enrolled, courses of study and degrees conferred, together with a copy of your school catalog. Filing previous years taxes See also Private Schools , discussed later. Filing previous years taxes Educational Organizations The term educational relates to: The instruction or training of individuals for the purpose of improving or developing their capabilities, or The instruction of the public on subjects useful to individuals and beneficial to the community. Filing previous years taxes Advocacy of a position. Filing previous years taxes   Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. Filing previous years taxes The mere presentation of unsupported opinion is not educational. Filing previous years taxes Method not educational. Filing previous years taxes   The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). Filing previous years taxes The following factors may indicate that the method is not educational. Filing previous years taxes The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. Filing previous years taxes The facts that purport to support the viewpoint are distorted. Filing previous years taxes The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. Filing previous years taxes The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training. Filing previous years taxes   Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present. Filing previous years taxes Qualifying organizations. Filing previous years taxes   The following types of organizations may qualify as educational: An organization, such as a primary or secondary school, a college, or a professional or trade school, that has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled student body in attendance at a place where the educational activities are regularly carried on, An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs, An organization that presents a course of instruction by correspondence or through the use of television or radio, A museum, zoo, planetarium, symphony orchestra, or other similar organization, A nonprofit children's day-care center, and A credit counseling organization. Filing previous years taxes College book stores, cafeterias, restaurants, etc. Filing previous years taxes   These and other on-campus organizations should submit information to show that they are controlled by and operated for the convenience of the faculty and student body or by whom they are controlled and whom they serve. Filing previous years taxes Alumni association. Filing previous years taxes   An alumni association should establish that it is organized to promote the welfare of the university with which it is affiliated, is subject to the control of the university as to its policies and destination of funds, and is operated as an integral part of the university or is otherwise organized to promote the welfare of the college or university. Filing previous years taxes If your association does not have these characteristics, it may still be exempt as a social club if it meets the requirements described in chapter 4, under 501(c)(7) - Social and Recreation Clubs . Filing previous years taxes Athletic organization. Filing previous years taxes   This type of organization must submit evidence that it is engaged in activities such as directing and controlling interscholastic athletic competitions, conducting tournaments, and prescribing eligibility rules for contestants. Filing previous years taxes If it is not so engaged, your organization may be exempt as a social club described in chapter 4. Filing previous years taxes Raising funds to be used for travel and other activities to interview and persuade prospective students with outstanding athletic ability to attend a particular university does not show an exempt purpose. Filing previous years taxes If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. Filing previous years taxes Private Schools Every private school filing an application for recognition of tax-exempt status must supply the IRS (on Schedule B, Form 1023) with the following information. Filing previous years taxes The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. Filing previous years taxes (This information also must be projected, so far as may be feasible, for the next academic year. Filing previous years taxes ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. Filing previous years taxes A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. Filing previous years taxes A statement indicating whether any of the organizations described in item (3) above have an objective of maintaining segregated public or private school education at the time the application is filed and, if so, whether any of the individuals described in item (3) are officers or active members of those organizations at the time the application is filed. Filing previous years taxes The public school district and county in which the school is located. Filing previous years taxes How to determine racial composition. Filing previous years taxes   The racial composition of the student body, faculty, and administrative staff can be an estimate based on the best information readily available to the school, without requiring student applicants, students, faculty, or administrative staff to submit to the school information that the school otherwise does not require. Filing previous years taxes Nevertheless, a statement of the method by which the racial composition was determined must be supplied. Filing previous years taxes The identity of individual students or members of the faculty and administrative staff should not be included with this information. Filing previous years taxes   A school that is a state or municipal instrumentality (see Instrumentalities , near the beginning of this chapter), whether or not it qualifies for exemption under section 501(c)(3), is not considered to be a private school for purposes of the following discussion. Filing previous years taxes Racially Nondiscriminatory Policy To qualify as an organization exempt from federal income tax, a private school must include a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that it has a racially nondiscriminatory policy as to students and that it does not discriminate against applicants and students on the basis of race, color, or national or ethnic origin. Filing previous years taxes Also, the school must circulate information that clearly states the school's admission policies. Filing previous years taxes A racially nondiscriminatory policy toward students means that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administering its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. Filing previous years taxes The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. Filing previous years taxes The existence of a racially discriminatory policy with respect to the employment of faculty and administrative staff is indicative of a racially discriminatory policy as to students. Filing previous years taxes Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. Filing previous years taxes A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance is not discrimination on the basis of race when the purpose and effect of this policy is to promote establishing and maintaining the school's nondiscriminatory policy. Filing previous years taxes A school that selects students on the basis of membership in a religious denomination or unit is not discriminating if membership in the denomination or unit is open to all on a racially nondiscriminatory basis. Filing previous years taxes Policy statement. Filing previous years taxes   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. Filing previous years taxes Also, the school must include a reference to its racially nondiscriminatory policy in other written advertising that it uses to inform prospective students of its programs. Filing previous years taxes Publicity requirement. Filing previous years taxes   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. Filing previous years taxes Selective communication of a racially nondiscriminatory policy that a school provides solely to leaders of racial groups will not be considered an effective means of communication to make the policy known to all segments of the community. Filing previous years taxes To satisfy this requirement, the school must use one of the following two methods. Filing previous years taxes Method one. Filing previous years taxes   The school can publish a notice of its racially nondiscriminatory policy in a newspaper of general circulation that serves all racial segments of the community. Filing previous years taxes Such publication must be repeated at least once annually during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. Filing previous years taxes When more than one community is served by a school, the school can publish the notice in those newspapers that are reasonably likely to be read by all racial segments in the communities that the school serves. Filing previous years taxes If this method is used, the notice must meet the following printing requirements. Filing previous years taxes It must appear in a section of the newspaper likely to be read by prospective students and their families. Filing previous years taxes It must occupy at least 3 column inches. Filing previous years taxes It must have its title printed in at least 12 point bold face type. Filing previous years taxes It must have the remaining text printed in at least 8 point type. Filing previous years taxes The following is an acceptable example of the notice:   NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS     The M School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. Filing previous years taxes It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. Filing previous years taxes   Method two. Filing previous years taxes   The school can use the broadcast media to publicize its racially nondiscriminatory policy if this use makes the policy known to all segments of the general community the school serves. Filing previous years taxes If the school uses this method, it must provide documentation showing that the means by which this policy was communicated to all segments of the general community was reasonably expected to be effective. Filing previous years taxes In this case, appropriate documentation would include copies of the tapes or scripts used and records showing that there was an adequate number of announcements. Filing previous years taxes The documentation also would include proof that these announcements were made during hours when they were likely to be communicated to all segments of the general community, that they were long enough to convey the message clearly, and that they were broadcast on radio or television stations likely to be listened to by substantial numbers of members of all racial segments of the general community. Filing previous years taxes Announcements must be made during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. Filing previous years taxes Exceptions. Filing previous years taxes   The publicity requirements will not apply in the following situations. Filing previous years taxes First, if for the preceding 3 years the enrollment of a parochial or other church-related school consists of students at least 75% of whom are members of the sponsoring religious denomination or unit, the school can make known its racially nondiscriminatory policy in whatever newspapers or circulars the religious denomination or unit uses in the communities from which the students are drawn. Filing previous years taxes These newspapers and circulars can be distributed by a particular religious denomination or unit or by an association that represents a number of religious organizations of the same denomination. Filing previous years taxes If, however, the school advertises in newspapers of general circulation in the community or communities from which its students are drawn and the second exception (discussed next) does not apply to the school, then it must comply with either of the publicity requirements explained earlier. Filing previous years taxes Second, if a school customarily draws a substantial percentage of its students nationwide, worldwide, from a large geographic section or sections of the United States, or from local communities, and if the school follows a racially nondiscriminatory policy as to its students, the school may satisfy the publicity requirement by complying with the instructions explained earlier under Policy statement . Filing previous years taxes   The school can demonstrate that it follows a racially nondiscriminatory policy either by showing that it currently enrolls students of racial minority groups in meaningful numbers or, except for local community schools, when minority students are not enrolled in meaningful numbers, that its promotional activities and recruiting efforts in each geographic area were reasonably designed to inform students of all racial segments in the general communities within the area of the availability of the school. Filing previous years taxes The question as to whether a school demonstrates such a policy satisfactorily will be determined on the basis of the facts and circumstances of each case. Filing previous years taxes   The IRS recognizes that the failure by a school drawing its students from local communities to enroll racial minority group students may not necessarily indicate the absence of a racially nondiscriminatory policy when there are relatively few or no such students in these communities. Filing previous years taxes Actual enrollment is, however, a meaningful indication of a racially nondiscriminatory policy in a community in which a public school or schools became subject to a desegregation order of a federal court or are otherwise expressly obligated to implement a desegregation plan under the terms of any written contract or other commitment to which any federal agency was a party. Filing previous years taxes   The IRS encourages schools to satisfy the publicity requirement by using either of the methods described earlier, even though a school considers itself to be within one of the Exceptions. Filing previous years taxes The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. Filing previous years taxes In this regard, it is each school's responsibility to determine whether either of the exceptions applies. Filing previous years taxes Such responsibility will prepare the school, if it is audited by the IRS, to demonstrate that the failure to publish its racially nondiscriminatory policy in accordance with either one of the publicity requirements was justified by one of the exceptions. Filing previous years taxes Also, a school must be prepared to demonstrate that it has publicly disavowed or repudiated any statements purported to have been made on its behalf (after November 6, 1975) that are contrary to its publicity of a racially nondiscriminatory policy as to students, to the extent that the school or its principal official was aware of these statements. Filing previous years taxes Facilities and programs. Filing previous years taxes   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. Filing previous years taxes Scholarship and loan programs. Filing previous years taxes   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. Filing previous years taxes This must be known throughout the general community being served by the school and should be referred to in its publicity. Filing previous years taxes Financial assistance programs, as well as scholarships and loans made under financial assistance programs, that favor members of one or more racial minority groups and that do not significantly detract from or are designed to promote a school's racially nondiscriminatory policy will not adversely affect the school's exempt status. Filing previous years taxes Certification. Filing previous years taxes   An individual authorized to take official action on behalf of a school that claims to be racially nondiscriminatory as to students must certify annually, under penalties of perjury, on Schedule E (Form 990 or 990-EZ) or Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax, whichever applies, that to the best of his or her knowledge and belief the school has satisfied all requirements that apply, as previously explained. Filing previous years taxes   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. Filing previous years taxes Recordkeeping requirements. Filing previous years taxes With certain exceptions, given later, each exempt private school must maintain the following records for a minimum period of 3 years, beginning with the year after the year of compilation or acquisition. Filing previous years taxes Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. Filing previous years taxes Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. Filing previous years taxes Copies of all materials used by or on behalf of the school to solicit contributions. Filing previous years taxes Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. Filing previous years taxes (Schools advertising nationally or in a large geographic segment or segments of the United States need only maintain a record sufficient to indicate when and in what publications their advertisements were placed. Filing previous years taxes ) The racial composition of the student body, faculty, and administrative staff can be determined in the same manner as that described at the beginning of this section. Filing previous years taxes However, a school cannot discontinue maintaining a system of records that reflect the racial composition of its students, faculty, and administrative staff used on November 6, 1975, unless it substitutes a different system that compiles substantially the same information, without advance approval of the IRS. Filing previous years taxes The IRS does not require that a school release any personally identifiable records or personal information except in accordance with the requirements of the Family Educational Rights and Privacy Act of 1974. Filing previous years taxes Similarly, the IRS does not require a school to keep records prohibited under state or federal law. Filing previous years taxes Exceptions. Filing previous years taxes   The school does not have to independently maintain these records for IRS use if both of the following are true. Filing previous years taxes Substantially the same information has been included in a report or reports filed with an agency or agencies of federal, state, or local governments, and this information is current within 1 year. Filing previous years taxes The school maintains copies of these reports from which this information is readily obtainable. Filing previous years taxes If these reports do not include all of the information required, as discussed earlier, records providing such remaining information must be maintained by the school for IRS use. Filing previous years taxes Failure to maintain records. Filing previous years taxes   Failure to maintain or to produce the required records and information, upon proper request, will create a presumption that the organization has failed to comply with these guidelines. Filing previous years taxes Organizations Providing Insurance An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. Filing previous years taxes However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next. Filing previous years taxes Charitable Risk Pools A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it: Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management, Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a), Is organized under state law authorizing this type of risk pooling, Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization), Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, Is controlled by a board of directors elected by its members, and Is organized under documents requiring that: Each member be a section 501(c)(3) organization exempt from tax under section 501(a), Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b). Filing previous years taxes Other Section 501(c)(3) Organizations In addition to the information required for all organizations, as described earlier, you should include any other information described in this section. Filing previous years taxes Charitable Organizations If your organization is applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest. Filing previous years taxes Some examples of this type of organization are those organized for: Relief of the poor, the distressed, or the underprivileged, Advancement of religion, Advancement of education or science, Erection or maintenance of public buildings, monuments, or works, Lessening the burdens of government, Lessening of neighborhood tensions, Elimination of prejudice and discrimination, Defense of human and civil rights secured by law, and Combating community deterioration and juvenile delinquency. Filing previous years taxes The rest of this section contains a description of the information to be provided by certain specific organizations. Filing previous years taxes This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. Filing previous years taxes Each of the following organizations must submit the information described. Filing previous years taxes Charitable organization supporting education. Filing previous years taxes   Submit information showing how your organization supports education — for example, contributes to an existing educational institution, endows a professorial chair, contributes toward paying teachers' salaries, or contributes to an educational institution to enable it to carry on research. Filing previous years taxes Scholarships. Filing previous years taxes   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. Filing previous years taxes Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. Filing previous years taxes How and by whom the recipients are or will be selected. Filing previous years taxes If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. Filing previous years taxes If awards are or will be made to recipients of a particular class, for example, children of employees of a particular employer— Whether any preference is or will be accorded an applicant by reason of the parent's position, length of employment, or salary, Whether as a condition of the award the recipient must upon graduation accept employment with the company, and Whether the award will be continued even if the parent's employment ends. Filing previous years taxes A copy of the scholarship application form and any brochures or literature describing the scholarship program. Filing previous years taxes Hospital. Filing previous years taxes   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. Filing previous years taxes   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. Filing previous years taxes You must attach a list showing: The names of the active and courtesy staff members of the proprietary hospital, as well as the names of your medical staff members after the transfer to nonprofit ownership, and The names of any doctors who continued to lease office space in the hospital after its transfer to nonprofit ownership and the amount of rent paid. Filing previous years taxes Submit also an appraisal showing the fair rental value of the rented space. Filing previous years taxes Clinic. Filing previous years taxes   If you are organized to operate a clinic, attach a statement including: A description of the facilities and services, To whom the services are offered, such as the public at large or a specific group, How charges are determined, such as on a profit basis, to recover costs, or at less than cost, By whom administered and controlled, Whether any of the professional staff (that is, those who perform or will perform the clinical services) also serve or will serve in an administrative capacity, and How compensation paid the professional staff is or will be determined. Filing previous years taxes Home for the aged. Filing previous years taxes   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. Filing previous years taxes Community nursing bureau. Filing previous years taxes   If you provide a nursing register or community nursing bureau, provide information showing that your organization will be operated as a community project and will receive its primary support from public contributions to maintain a nonprofit register of qualified nursing personnel, including graduate nurses, unregistered nursing school graduates, licensed attendants and practical nurses for the benefit of hospitals, health agencies, doctors, and individuals. Filing previous years taxes Organization providing loans. Filing previous years taxes   If you make, or will make, loans for charitable and educational purposes, submit the following information. Filing previous years taxes An explanation of the circumstances under which such loans are, or will be, made. Filing previous years taxes Criteria for selection, including the rules of eligibility. Filing previous years taxes How and by whom the recipients are or will be selected. Filing previous years taxes Manner of repayment of the loan. Filing previous years taxes Security required, if any. Filing previous years taxes Interest charged, if any, and when payable. Filing previous years taxes Copies in duplicate of the loan application and any brochures or literature describing the loan program. Filing previous years taxes Public-interest law firms. Filing previous years taxes   If your organization was formed to litigate in the public interest (as opposed to providing legal services to the poor), such as in the area of protection of the environment, you should submit the following information. Filing previous years taxes How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. Filing previous years taxes Whether the organization will accept fees for its services. Filing previous years taxes A description of the cases litigated or to be litigated and how they benefit the public generally. Filing previous years taxes Whether the policies and program of the organization are the responsibility of a board or committee representative of the public interest, which is neither controlled by employees or persons who litigate on behalf of the organization nor by any organization that is not itself an organization described in this chapter. Filing previous years taxes Whether the organization is operated, through sharing of office space or otherwise, in a way to create identification or confusion with a particular private law firm. Filing previous years taxes Whether there is an arrangement to provide, directly or indirectly, a deduction for the cost of litigation that is for the private benefit of the donor. Filing previous years taxes Acceptance of attorneys' fees. Filing previous years taxes   A nonprofit public-interest law firm can accept attorneys' fees in public-interest cases if the fees are paid directly by its clients and the fees are not more than the actual costs incurred in the case. Filing previous years taxes Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. Filing previous years taxes   Firms can accept fees awarded or approved by a court or an administrative agency and paid by an opposing party if the firms do not use the likelihood or probability of fee awards as a consideration in the selection of cases. Filing previous years taxes All fee awards must be paid to the organization and not to its individual staff attorneys. Filing previous years taxes Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. Filing previous years taxes Private attorneys, whose services are retained by the firm to assist it in particular cases, can be compensated by the firm, but only on a fixed fee or salary basis. Filing previous years taxes   The total amount of all attorneys' fees (court awarded and those received from clients) must not be more than 50% of the total cost of operations of the organization's legal functions, calculated over a 5-year period. Filing previous years taxes   If, in order to carry out its program, an organization violates applicable canons of ethics, disrupts the judicial system, or engages in any illegal action, the organization will jeopardize its exemption. Filing previous years taxes Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. Filing previous years taxes That the particular religious beliefs of the organization are truly and sincerely held. Filing previous years taxes That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. Filing previous years taxes Therefore, your group (or organization) may not qualify for treatment as an exempt religious organization for tax purposes if its actions, as contrasted with its beliefs, are contrary to well established and clearly defined public policy. Filing previous years taxes If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs. Filing previous years taxes Churches. Filing previous years taxes   Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption. Filing previous years taxes In this event, you should submit information showing that your organization is a church, synagogue, association or convention of churches, religious order, or religious organization that is an integral part of a church, and that it is engaged in carrying out the function of a church. Filing previous years taxes   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. Filing previous years taxes Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. Filing previous years taxes The IRS considers the facts and circumstances of each organization applying for church status. Filing previous years taxes Convention or association of churches. Filing previous years taxes   Any organization that is otherwise a convention or association of churches will not fail to qualify as a church merely because the membership of the organization includes individuals as well as churches or because the individuals have voting rights in the organization. Filing previous years taxes Integrated auxiliaries. Filing previous years taxes   An organization is an integrated auxiliary of a church if all the following are true. Filing previous years taxes The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). Filing previous years taxes It is affiliated with a church or a convention or association of churches. Filing previous years taxes It is internally supported. Filing previous years taxes An organization is internally supported unless both of the following are true. Filing previous years taxes It offers admissions, goods, services, or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for a small part of the cost). Filing previous years taxes It normally gets more than 50% of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or businesses. Filing previous years taxes Special rule. Filing previous years taxes   Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy (1) and (2) shown earlier are integrated auxiliaries of a church even if they are not internally supported. Filing previous years taxes   In order for an organization (including a church and religious organization) to qualify for tax exemption, no part of its net earnings can inure to any individual. Filing previous years taxes   Although an individual is entitled to a charitable deduction for contributions to a church, the assignment or similar transfer of compensation for personal services to a church generally does not relieve a taxpayer of federal income tax liability on the compensation, regardless of the motivation behind the transfer. Filing previous years taxes Scientific Organizations You must show that your organization's research will be carried on in the public interest. Filing previous years taxes Scientific research will be considered to be in the public interest if the results of the research (including any patents, copyrights, processes, or formulas) are made available to the public on a nondiscriminatory basis; if the research is performed for the United States or a state, county, or municipal government; or if the research is carried on for one of the following purposes. Filing previous years taxes Aiding in the scientific education of college or university students. Filing previous years taxes Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th