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Search freetaxusa com Publication 584 - Additional Material Table of Contents This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Entrance Hall This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Living Room This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Dining Room This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Kitchen This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Den This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Bedrooms This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Bathrooms This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Recreation Room This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Laundry and Basement This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Garage This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Sporting Equipment This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Men's Clothing This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Women's Clothing This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Children's Clothing This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Jewelry This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Electrical Appliances This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Linens This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Miscellaneous This image is too large to be displayed in the current screen. Search freetaxusa com Please click the link to view the image. Search freetaxusa com Motor Vehicles Schedule 20. Search freetaxusa com Home (Excluding Contents) Note. Search freetaxusa com If you used the entire property as your home, fill out only column (a). Search freetaxusa com If you used part of the property as your home and part of it for business or to produce rental income, you must allocate the entries on lines 2-9 between the personal part (column (a)) and the business/rental part (column (b)). Search freetaxusa com 1. Search freetaxusa com Description of property (Show location and date acquired. Search freetaxusa com )     (a)  Personal Part (b)  Business/Rental Part 2. Search freetaxusa com Cost or other (adjusted) basis of property (from Worksheet A)     3. Search freetaxusa com Insurance or other reimbursement Note. Search freetaxusa com If line 2 is more than line 3, skip line 4. Search freetaxusa com If line 3 is more than line 2, you exclude gain, and the gain is more than you can exclude, see the instructions for line 3 in the Instructions for Form 4684 for the amount to enter. Search freetaxusa com     4. Search freetaxusa com Gain from casualty. Search freetaxusa com If line 3 is more than line 2, enter the difference here and skip lines 5 through 9. Search freetaxusa com But see Next below line 9. Search freetaxusa com     5. Search freetaxusa com Fair market value before casualty     6. Search freetaxusa com Fair market value after casualty     7. Search freetaxusa com Decrease in fair market value. Search freetaxusa com Subtract line 6 from line 5. Search freetaxusa com     8. Search freetaxusa com Enter the smaller of line 2 or line 7 Note for business/rental part. Search freetaxusa com If the property was totally destroyed by casualty, enter on line 8, column (b) the amount from line 2, column (b). Search freetaxusa com     9. Search freetaxusa com Subtract line 3 from line 8. Search freetaxusa com If zero or less, enter -0-. Search freetaxusa com     Next: Transfer the entries from line 1 and lines 2-9, column (a), above to the corresponding lines on Form 4684, Section A. Search freetaxusa com Transfer the entries from line 1 and lines 2-9, column (b), to the corresponding lines on Form 4684, Section B. Search freetaxusa com Worksheet A. Search freetaxusa com Cost or Other (Adjusted) Basis Caution. Search freetaxusa com See the Worksheet A Instructions before you use this worksheet. Search freetaxusa com         (a) Personal Part (b) Business/Rental Part 1. Search freetaxusa com   Enter the purchase price of the home damaged or destroyed. Search freetaxusa com (If you filed Form 2119 when you originally acquired that home to postpone gain on the sale of a previous home before May 7, 1997, enter the adjusted basis of the new home from that Form 2119. Search freetaxusa com ) 1. Search freetaxusa com     2. Search freetaxusa com   Seller paid points for home bought after 1990. Search freetaxusa com Do not include any seller-paid points you already subtracted to arrive at the amount entered on line 1 2. Search freetaxusa com     3. Search freetaxusa com   Subtract line 2 from line 1 3. Search freetaxusa com     4. Search freetaxusa com   Settlement fees or closing costs. Search freetaxusa com (See Settlement costs in Publication 551. Search freetaxusa com ) If line 1 includes the adjusted basis of the new home from Form 2119, skip lines 4a-4g and 5; go to line 6. Search freetaxusa com         a. Search freetaxusa com Abstract and recording fees 4a. Search freetaxusa com       b. Search freetaxusa com Legal fees (including fees for title search and preparing documents) 4b. Search freetaxusa com       c. Search freetaxusa com Survey fees 4c. Search freetaxusa com       d. Search freetaxusa com Title insurance 4d. Search freetaxusa com       e. Search freetaxusa com Transfer or stamp taxes 4e. Search freetaxusa com       f. Search freetaxusa com Amounts that the seller owed that you agreed to pay (back taxes or interest, recording or mortgage fees, and sales commissions) 4f. Search freetaxusa com       g. Search freetaxusa com Other 4g. Search freetaxusa com     5. Search freetaxusa com   Add lines 4a through 4g 5. Search freetaxusa com     6. Search freetaxusa com   Cost of additions and improvements. Search freetaxusa com (See Increases to Basis in Publication 551. Search freetaxusa com ) Do not include any additions and improvements included on line 1 6. Search freetaxusa com     7. Search freetaxusa com   Special tax assessments paid for local improvements, such as streets and sidewalks 7. Search freetaxusa com     8. Search freetaxusa com   Other increases to basis 8. Search freetaxusa com     9. Search freetaxusa com   Add lines 3, 5, 6, 7, and 8 9. Search freetaxusa com     10. Search freetaxusa com   Depreciation allowed or allowable, related to the business use or rental of the home 10. Search freetaxusa com 0   11. Search freetaxusa com   Other decreases to basis (See Decreases to Basis in Publication 551. Search freetaxusa com ) 11. Search freetaxusa com     12. Search freetaxusa com   Add lines 10 and 11 12. Search freetaxusa com     13. Search freetaxusa com   Cost or other (adjusted) basis of home damaged or destroyed. Search freetaxusa com Subtract line 12 from line 9. Search freetaxusa com Enter here and on Schedule 20, line 2 13. Search freetaxusa com     Worksheet A Instructions. Search freetaxusa com If you use Worksheet A to figure the cost or other (adjusted) basis of your home, follow these instructions. Search freetaxusa com DO NOT use this worksheet to determine your basis if you acquired an interest in your home from a decedent who died in 2010 and whose executor filed Form 8939. Search freetaxusa com IF. Search freetaxusa com . Search freetaxusa com . Search freetaxusa com   THEN. Search freetaxusa com . Search freetaxusa com . Search freetaxusa com you inherited your home from a decedent who died either before or after 2010 or from a decedent who died in 2010 and whose executor did not file Form 8939. Search freetaxusa com 1 skip lines 1–4 of the worksheet. Search freetaxusa com 2 find your basis using the rules under Inherited Property in Publication 551. Search freetaxusa com Enter this amount on line 5 of the worksheet. Search freetaxusa com 3 fill out lines 6–13 of the worksheet. Search freetaxusa com you received your home as a gift 1 read Property Received as a Gift in Publication 551 and enter on lines 1 and 3 of the worksheet either the donor's adjusted basis or the home's fair market value at the time of the gift, whichever is appropriate. Search freetaxusa com 2 if you can add any federal gift tax to your basis, enter that amount on line 5 of the worksheet. Search freetaxusa com 3 fill out the rest of the worksheet. Search freetaxusa com you received your home as a trade for other property 1 enter on line 1 of the worksheet the fair market value of the other property at the time of the trade. Search freetaxusa com (But if you received your home as a trade for your previous home before May 7, 1997, and had a gain on the trade that you postponed using Form 2119, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Search freetaxusa com ) 2 fill out the rest of the worksheet. Search freetaxusa com you built your home 1 add the purchase price of the land and the cost of building the home. Search freetaxusa com Enter that total on line 1 of the worksheet. Search freetaxusa com (However, if you filed a Form 2119 to postpone gain on the sale of a previous home before May 7, 1997, enter on line 1 of the worksheet the adjusted basis of the new home from that Form 2119. Search freetaxusa com ) 2 fill out the rest of the worksheet. Search freetaxusa com you received your home from your spouse after July 18, 1984 1 skip lines 1–4 of the worksheet. Search freetaxusa com 2 enter on line 5 of the worksheet your spouse's cost or other (adjusted) basis in the home just before you received it. Search freetaxusa com 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Search freetaxusa com you owned a home jointly with your spouse, who transferred his or her interest in the home to you after July 18, 1984     fill out one worksheet, making adjustments to basis for events both before and after the transfer. Search freetaxusa com   you received your home from your spouse before July 19, 1984 1 skip lines 1–4 of the worksheet. Search freetaxusa com 2 enter on line 5 of the worksheet the home's fair market value at the time you received it. Search freetaxusa com 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after the transfer. Search freetaxusa com you owned a home jointly with your spouse, and your spouse transferred his or her interest in the home to you before July 19, 1984 1 fill out a worksheet, lines 1–13, making adjustments to basis only for events before the transfer. Search freetaxusa com 2 multiply the amount on line 13 of that worksheet by 50% (0. Search freetaxusa com 50) to get the adjusted basis of your half-interest at the time of the transfer. Search freetaxusa com 3 multiply the fair market value of the home at the time of the transfer by 50% (0. Search freetaxusa com 50). Search freetaxusa com Generally, this is the basis of the half-interest that your spouse owned. Search freetaxusa com 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Search freetaxusa com 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after the transfer. Search freetaxusa com you owned your home jointly with a nonspouse 1 fill out lines 1–13 of the worksheet. Search freetaxusa com 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest. Search freetaxusa com Worksheet A Instructions. Search freetaxusa com (Continued) IF. Search freetaxusa com . Search freetaxusa com . Search freetaxusa com   THEN. Search freetaxusa com . Search freetaxusa com . Search freetaxusa com you owned your home jointly with your spouse who died before 2010 and before the casualty 1 fill out a worksheet, lines 1–13, including adjustments to basis only for events before your spouse's death. Search freetaxusa com 2 multiply the amount on line 13 of that worksheet by 50% (0. Search freetaxusa com 50) to get the adjusted basis of your half-interest on the date of death. Search freetaxusa com 3 figure the basis for the half-interest owned by your spouse. Search freetaxusa com This is one-half of the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax). Search freetaxusa com (The basis in your half will remain one-half of the adjusted basis determined in step 2. Search freetaxusa com ) 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Search freetaxusa com 5 complete lines 6–13 of the second worksheet, making adjustments to basis only for events after your spouse's death. Search freetaxusa com you owned your home jointly with your spouse who died before 2010 and before the casualty, and your permanent legal home is in a community property state 1 skip lines 1–4 of the worksheet. Search freetaxusa com 2 enter the amount of your basis on line 5 of the worksheet. Search freetaxusa com Generally, this is the fair market value of the home at the time of death. Search freetaxusa com (But see Community Property in Publication 551 for special rules. Search freetaxusa com ) 3 fill out lines 6–13 of the worksheet, making adjustments to basis only for events after your spouse's death. Search freetaxusa com you owned your home jointly with a nonspouse who died before 2010 and before the casualty 1 fill out lines 1–13 of the worksheet, including adjustments to basis only for events before the co-owner's death. Search freetaxusa com 2 multiply the amount on line 13 by your percentage of ownership to get the adjusted basis of your part-interest on the date of death. Search freetaxusa com 3 multiply the fair market value on the date of death (or later alternate valuation used for estate or inheritance tax) by the co-owner's percentage of ownership. Search freetaxusa com This is the basis for the co-owner's part-interest. Search freetaxusa com 4 add the amounts from steps 2 and 3 and enter the total on line 5 of a second worksheet. Search freetaxusa com 5 complete lines 6–13 of the second worksheet, including adjustments to basis only for events after the co-owner's death. Search freetaxusa com your home was ever damaged as a result of a prior casualty 1 on line 8 of the worksheet, enter any amounts you spent to restore the home to its condition before the prior casualty. Search freetaxusa com 2 on line 11 enter: any insurance reimbursements you received (or expect to receive) for the prior loss,  and any deductible casualty losses from prior years not covered by insurance. Search freetaxusa com the person who sold you your home paid points on your loan and you bought your home after 1990 but before April 4, 1994. Search freetaxusa com   on line 2 enter the seller-paid points only if you deducted them as home mortgage interest in the year paid (unless you used the seller-paid points to reduce the amount on line 1). Search freetaxusa com the person who sold you your home paid points on your loan and you bought your home after April 3, 1994   on line 2 enter the seller-paid points even if you did not deduct them (unless you used the seller-paid points to reduce the amount on line 1). Search freetaxusa com you used part of the property as your home and part of it for business or to produce rental income   you must allocate the entries on Worksheet A between the personal part (column (a)) and the business/rental part (column (b)). Search freetaxusa com none of these items apply   fill out the entire worksheet. Search freetaxusa com Prev  Up  Next   Home   More Online Publications
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Search freetaxusa com 3. Search freetaxusa com   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. Search freetaxusa com Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. Search freetaxusa com Certain contracts held by a charitable remainder trust. Search freetaxusa com Excise Taxes. Search freetaxusa com Indoor tanning services. Search freetaxusa com Application for Recognition of ExemptionPolitical activity. Search freetaxusa com Private delivery service. Search freetaxusa com Amendments to organizing documents required. Search freetaxusa com How to show reasonable action and good faith. Search freetaxusa com Not acting reasonably and in good faith. Search freetaxusa com Prejudicing the interest of the Government. Search freetaxusa com Procedure for requesting extension. Search freetaxusa com More information. Search freetaxusa com 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. Search freetaxusa com Grass roots expenditures. Search freetaxusa com Lobbying nontaxable amount. Search freetaxusa com Grass roots nontaxable amount. Search freetaxusa com Organization that no longer qualifies. Search freetaxusa com Tax on organization. Search freetaxusa com Tax on managers. Search freetaxusa com Taxes on organizations. Search freetaxusa com Taxes on managers. Search freetaxusa com Political expenditures. Search freetaxusa com Correction of expenditure. Search freetaxusa com 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. Search freetaxusa com Religious. Search freetaxusa com Charitable. Search freetaxusa com Scientific. Search freetaxusa com Testing for public safety. Search freetaxusa com Literary. Search freetaxusa com Educational. Search freetaxusa com 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). Search freetaxusa com The prevention of cruelty to children or animals. Search freetaxusa com To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. Search freetaxusa com A trust is a fund or foundation and will qualify. Search freetaxusa com However, an individual or a partnership will not qualify. Search freetaxusa com Examples. Search freetaxusa com   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. Search freetaxusa com Child care organizations. Search freetaxusa com   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. Search freetaxusa com Instrumentalities. Search freetaxusa com   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). Search freetaxusa com Examples of a qualifying instrumentality might include state schools, universities, or hospitals. Search freetaxusa com However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. Search freetaxusa com A state or municipality itself does not qualify for exemption. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com Fundraising events. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com See Disclosure of Quid Pro Quo Contributions in chapter 2. Search freetaxusa com Exemption application not filed. Search freetaxusa com   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. Search freetaxusa com Separate fund—contributions that are deductible. Search freetaxusa com   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. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com Personal benefit contracts. Search freetaxusa com   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. Search freetaxusa com   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. Search freetaxusa com Certain annuity contracts. Search freetaxusa com   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). Search freetaxusa com Certain contracts held by a charitable remainder trust. Search freetaxusa com   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. Search freetaxusa com Excise tax. Search freetaxusa com   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. Search freetaxusa com The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. Search freetaxusa com Excise Taxes. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com Indoor tanning services. Search freetaxusa com   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. Search freetaxusa com For more information, go to IRS. Search freetaxusa com gov and select Affordable Care Act Tax Provisions. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com See the organization headings that follow for specific information your organization may need to provide. Search freetaxusa com Form 1023. Search freetaxusa com   Your organization must file its application for recognition of exemption on Form 1023. Search freetaxusa com See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. Search freetaxusa com Some organizations are not required to file Form 1023. Search freetaxusa com See Organizations Not Required To File Form 1023, later. Search freetaxusa com    Additional information to help you complete your application can be found online. Search freetaxusa com 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. Search freetaxusa com See Exemption Requirements - Section 501(c)(3) Organizations. Search freetaxusa com   Form 1023 and accompanying statements must show that all of the following are true. Search freetaxusa com The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. Search freetaxusa com ) specified in the introduction to this chapter. Search freetaxusa com No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com See Political activity, next, and Lobbying Expenditures , near the end of this chapter. Search freetaxusa com Political activity. Search freetaxusa com   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). Search freetaxusa com Such participation or intervention includes the publishing or distributing of statements. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com Effective date of exemption. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com Otherwise, exemption will be recognized only from the date of receipt. Search freetaxusa com The date of receipt is the date of the U. Search freetaxusa com S. Search freetaxusa com 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. Search freetaxusa com Private delivery service. Search freetaxusa com   If a private delivery service designated by the IRS, rather than the U. Search freetaxusa com S. Search freetaxusa com Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. Search freetaxusa com The following private delivery services have been designated by the IRS. Search freetaxusa com DHL Express (DHL): DHL “Same Day” Service. Search freetaxusa com Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. Search freetaxusa com United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Search freetaxusa com M. Search freetaxusa com , UPS Worldwide Express Plus, and UPS Worldwide Express. Search freetaxusa com Amendments to organizing documents required. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com Extensions of time for filing. Search freetaxusa com   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. Search freetaxusa com Automatic 12-month extension. Search freetaxusa com 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. Search freetaxusa com To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. Search freetaxusa com 9100-2. Search freetaxusa com ” Discretionary extensions. Search freetaxusa com 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. Search freetaxusa com How to show reasonable action and good faith. Search freetaxusa com   An organization acted reasonably and showed good faith if at least one of the following is true. Search freetaxusa com The organization requests relief before its failure to file is discovered by the IRS. Search freetaxusa com The organization failed to file because of intervening events beyond its control. Search freetaxusa com 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. Search freetaxusa com The organization reasonably relied upon the written advice of the IRS. Search freetaxusa com The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. Search freetaxusa com 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. Search freetaxusa com Not acting reasonably and in good faith. Search freetaxusa com   An organization has not acted reasonably and in good faith under the following circumstances. Search freetaxusa com 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. Search freetaxusa com It was informed of the requirement to file and related tax consequences, but chose not to file. Search freetaxusa com It uses hindsight in requesting relief. Search freetaxusa com 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. Search freetaxusa com Prejudicing the interest of the Government. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com Procedure for requesting extension. Search freetaxusa com   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. Search freetaxusa com A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. Search freetaxusa com Any documents relevant to the application. Search freetaxusa com An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com ” 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. Search freetaxusa com This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. Search freetaxusa com The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. Search freetaxusa com 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. Search freetaxusa com ” 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. Search freetaxusa com 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. Search freetaxusa com The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. Search freetaxusa com   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. Search freetaxusa com Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. Search freetaxusa com More information. Search freetaxusa com   For more information about these procedures, see Regulations sections 301. Search freetaxusa com 9100-1, 301. Search freetaxusa com 9100-2, 301. Search freetaxusa com 9100-3, Revenue Procedure 2013-4, section 6. Search freetaxusa com 04, 2013-1 I. Search freetaxusa com R. Search freetaxusa com B. Search freetaxusa com 126, and Revenue Procedure 2013-8, 2013-1 I. Search freetaxusa com R. Search freetaxusa com B. Search freetaxusa com 237. Search freetaxusa com See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. Search freetaxusa com Notification from the IRS. Search freetaxusa com   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. Search freetaxusa com Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. Search freetaxusa com 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. Search freetaxusa com Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). Search freetaxusa com These organizations are exempt automatically if they meet the requirements of section 501(c)(3). Search freetaxusa com Filing Form 1023 to establish exemption. Search freetaxusa com   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. Search freetaxusa com By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. Search freetaxusa com A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. Search freetaxusa com Private foundations. Search freetaxusa com   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. Search freetaxusa com Gross receipts test. Search freetaxusa com   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. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com The organization must file Form 1023 within 90 days after the end of its second tax year. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com Example. Search freetaxusa com   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. Search freetaxusa com It was incorporated on January 1, 2009, and files returns on a calendar-year basis. Search freetaxusa com It did not file a Form 1023. Search freetaxusa com 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. Search freetaxusa com Therefore, it did not have to file Form 1023 and is exempt for those years. Search freetaxusa com However, for 2010, 2011, and 2012 the total gross receipts were $15,900. Search freetaxusa com Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. Search freetaxusa com 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. Search freetaxusa com The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. Search freetaxusa com   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. Search freetaxusa com See the procedures for this extension discussed earlier. Search freetaxusa com Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. Search freetaxusa com This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. Search freetaxusa com 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. Search freetaxusa com These conditions for exemption are referred to as the organizational test. Search freetaxusa com Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. Search freetaxusa com 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). Search freetaxusa com 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. Search freetaxusa com Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. Search freetaxusa com Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. Search freetaxusa com In interpreting an organization's articles, the law of the state where the organization was created is controlling. Search freetaxusa com 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. Search freetaxusa com The following are examples illustrating the organizational test. Search freetaxusa com Example 1. Search freetaxusa com Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). Search freetaxusa com These articles appropriately limit the organization's purposes. Search freetaxusa com The organization meets the organizational test. Search freetaxusa com Example 2. Search freetaxusa com An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. Search freetaxusa com The organization will not be properly limited as to its purposes since all research is not scientific. Search freetaxusa com The organization does not meet the organizational test. Search freetaxusa com Example 3. Search freetaxusa com 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). Search freetaxusa com The organization meets the organizational test. Search freetaxusa com Example 4. Search freetaxusa com 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. Search freetaxusa com Example 5. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com Example 6. Search freetaxusa com 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. Search freetaxusa com Such purposes are vague and may be accomplished other than in an exempt manner. Search freetaxusa com Example 7. Search freetaxusa com A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. Search freetaxusa com A hospital may or may not be exempt depending on the manner in which it is operated. Search freetaxusa com Example 8. Search freetaxusa com 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. Search freetaxusa com Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. Search freetaxusa com 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. Search freetaxusa com If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. Search freetaxusa com Dedication. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com Distribution. Search freetaxusa com   Revenue Procedure 82-2, 1982-1 C. Search freetaxusa com B. Search freetaxusa com 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. Search freetaxusa com The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com Sample articles of organization. Search freetaxusa com   See sample articles of organization in the Appendix in the back of this publication. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. Search freetaxusa com 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. Search freetaxusa com See also Private Schools , discussed later. Search freetaxusa com 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. Search freetaxusa com Advocacy of a position. Search freetaxusa com   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. Search freetaxusa com The mere presentation of unsupported opinion is not educational. Search freetaxusa com Method not educational. Search freetaxusa com   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). Search freetaxusa com The following factors may indicate that the method is not educational. Search freetaxusa com The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. Search freetaxusa com The facts that purport to support the viewpoint are distorted. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com   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. Search freetaxusa com Qualifying organizations. Search freetaxusa com   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. Search freetaxusa com College book stores, cafeterias, restaurants, etc. Search freetaxusa com   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. Search freetaxusa com Alumni association. Search freetaxusa com   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. Search freetaxusa com 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 . Search freetaxusa com Athletic organization. Search freetaxusa com   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. Search freetaxusa com If it is not so engaged, your organization may be exempt as a social club described in chapter 4. Search freetaxusa com 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. Search freetaxusa com If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. Search freetaxusa com 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. Search freetaxusa com The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. Search freetaxusa com (This information also must be projected, so far as may be feasible, for the next academic year. Search freetaxusa com ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. Search freetaxusa com A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. Search freetaxusa com 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. Search freetaxusa com The public school district and county in which the school is located. Search freetaxusa com How to determine racial composition. Search freetaxusa com   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. Search freetaxusa com Nevertheless, a statement of the method by which the racial composition was determined must be supplied. Search freetaxusa com The identity of individual students or members of the faculty and administrative staff should not be included with this information. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com Also, the school must circulate information that clearly states the school's admission policies. Search freetaxusa com 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. Search freetaxusa com The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. Search freetaxusa com 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. Search freetaxusa com Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com Policy statement. Search freetaxusa com   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. Search freetaxusa com 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. Search freetaxusa com Publicity requirement. Search freetaxusa com   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. Search freetaxusa com 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. Search freetaxusa com To satisfy this requirement, the school must use one of the following two methods. Search freetaxusa com Method one. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com If this method is used, the notice must meet the following printing requirements. Search freetaxusa com It must appear in a section of the newspaper likely to be read by prospective students and their families. Search freetaxusa com It must occupy at least 3 column inches. Search freetaxusa com It must have its title printed in at least 12 point bold face type. Search freetaxusa com It must have the remaining text printed in at least 8 point type. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com   Method two. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com Exceptions. Search freetaxusa com   The publicity requirements will not apply in the following situations. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com 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 . Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com   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. Search freetaxusa com The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. Search freetaxusa com In this regard, it is each school's responsibility to determine whether either of the exceptions applies. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com Facilities and programs. Search freetaxusa com   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. Search freetaxusa com Scholarship and loan programs. Search freetaxusa com   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. Search freetaxusa com This must be known throughout the general community being served by the school and should be referred to in its publicity. Search freetaxusa com 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. Search freetaxusa com Certification. Search freetaxusa com   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. Search freetaxusa com   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. Search freetaxusa com Recordkeeping requirements. Search freetaxusa com 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. Search freetaxusa com Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. Search freetaxusa com Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. Search freetaxusa com Copies of all materials used by or on behalf of the school to solicit contributions. Search freetaxusa com Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. Search freetaxusa com (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. Search freetaxusa com ) 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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com Similarly, the IRS does not require a school to keep records prohibited under state or federal law. Search freetaxusa com Exceptions. Search freetaxusa com   The school does not have to independently maintain these records for IRS use if both of the following are true. Search freetaxusa com 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. Search freetaxusa com The school maintains copies of these reports from which this information is readily obtainable. Search freetaxusa com 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. Search freetaxusa com Failure to maintain records. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com 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). Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com The rest of this section contains a description of the information to be provided by certain specific organizations. Search freetaxusa com This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. Search freetaxusa com Each of the following organizations must submit the information described. Search freetaxusa com Charitable organization supporting education. Search freetaxusa com   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. Search freetaxusa com Scholarships. Search freetaxusa com   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. Search freetaxusa com Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. Search freetaxusa com How and by whom the recipients are or will be selected. Search freetaxusa com If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. Search freetaxusa com 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. Search freetaxusa com A copy of the scholarship application form and any brochures or literature describing the scholarship program. Search freetaxusa com Hospital. Search freetaxusa com   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. Search freetaxusa com   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. Search freetaxusa com 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. Search freetaxusa com Submit also an appraisal showing the fair rental value of the rented space. Search freetaxusa com Clinic. Search freetaxusa com   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. Search freetaxusa com Home for the aged. Search freetaxusa com   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. Search freetaxusa com Community nursing bureau. Search freetaxusa com   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. Search freetaxusa com Organization providing loans. Search freetaxusa com   If you make, or will make, loans for charitable and educational purposes, submit the following information. Search freetaxusa com An explanation of the circumstances under which such loans are, or will be, made. Search freetaxusa com Criteria for selection, including the rules of eligibility. Search freetaxusa com How and by whom the recipients are or will be selected. Search freetaxusa com Manner of repayment of the loan. Search freetaxusa com Security required, if any. Search freetaxusa com Interest charged, if any, and when payable. Search freetaxusa com Copies in duplicate of the loan application and any brochures or literature describing the loan program. Search freetaxusa com Public-interest law firms. Search freetaxusa com   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. Search freetaxusa com How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. Search freetaxusa com Whether the organization will accept fees for its services. Search freetaxusa com A description of the cases litigated or to be litigated and how they benefit the public generally. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com Acceptance of attorneys' fees. Search freetaxusa com   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. Search freetaxusa com Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. Search freetaxusa com   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. Search freetaxusa com All fee awards must be paid to the organization and not to its individual staff attorneys. Search freetaxusa com Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. Search freetaxusa com 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. Search freetaxusa com   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. Search freetaxusa com   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. Search freetaxusa com Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. Search freetaxusa com That the particular religious beliefs of the organization are truly and sincerely held. Search freetaxusa com That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. Search freetaxusa com 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. Search freetaxusa com 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. Search freetaxusa com Churches. Search freetaxusa com   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. Search freetaxusa com 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. Search freetaxusa com   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. Search freetaxusa com Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. Search freetaxusa com The IRS considers the facts and circumstances of each organization applying for church status. Search freetaxusa com Convention or association of churches. Search freetaxusa com   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. Search freetaxusa com Integrated auxiliaries. Search freetaxusa com   An organization is an integrated auxiliary of a church if all the following are true. Search freetaxusa com The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). Search freetaxusa com It is affiliated with a church or a convention or association of churches. Search freetaxusa com It is internally supported. Search freetaxusa com An organization is internally supported unless both of the following are true. Search freetaxusa com 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). Search freetaxusa com 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. Search freetaxusa com Special rule. Search freetaxusa com   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. Search freetaxusa com   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. Search freetaxusa com   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. Search freetaxusa com Scientific Organizations You must show that your organization's research will be carried on in the public interest. Search freetaxusa com 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. Search freetaxusa com Aiding in the scientific education of college or university students. Search freetaxusa com Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th