If you’re thinking about starting a nonprofit and want to apply for tax-exempt status under Section 501(c)(3) of the tax code, you’ll need to use Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. Here are five tips to ensure a successful application:
1. The application must be complete and must include the user fee.
2. Some organizations may be able to file Form 1023-EZ, a streamlined version, if they meet certain criteria such as projected or past annual gross receipts of $50,000 or less for a period of three years.
3. Churches and their integrated auxiliaries (organizations affiliated with a church or association of churches that receives financial support primarily from internal church sources and not public or governmental sources), as well as public charities whose annual gross receipts are normally less than $5,000 do not need to apply for 501(c)(3) status to be tax-exempt.
4. Every tax-exempt organization, including a church, should have an Employer Identification Number (EIN) regardless of whether the organization has employees. An employer identification number is an organization’s account number with the IRS and is required for the organization to apply for tax-exempt status. Once the EIN is received by the organization, it must include it on the application.
5. Generally, an organization that is required to apply for recognition of exemption must notify the IRS within 27 months from the date it was formed.
If you have any questions about applying for tax-exempt status, please call the office for assistance.
Silicon Valley
111 N Market St, Ste 300
San Jose, CA
Sacramento
Appointment Only
Join our Weekly Newsletter! We promise we won’t spam.
Copyright All rights Reserved. Financial Dream Team, like all providers of personal financial services is required by law to inform their clients of their policies regarding privacy of client information. The information in this material is not intended as tax or legal advice. Financial Dream Team, USA, LLC is a registered business in Califronia. Provided content is for informational purposes only.