Tax law can be highly complex, and tax as it relates to nonprofits is no exception. That is why it is highly advantageous to hire a CPA for your nonprofit tax preparation needs if you share ownership in a nonprofit organization. Here is a brief look at some fundamentals to consider when preparing a tax return for a nonprofit organization.
Most nonprofits need to file a tax return.
Many people are surprised to hear that most nonprofit tax-exempt organizations are still required to file an annual tax return with the IRS. Even if nonprofit owners do not need to pay federal taxes, they must still file an informational tax return with the IRS. Nonprofit owners may do this by means of a form 990.
With this said, there are some nonprofits that are exempt from having to file a tax return with the IRS. Faith-based organizations, government corporations, and subsidiaries of other nonprofits, for example, may not need to file a return.
Nonprofits may still have to pay some taxes.
Even if a nonprofit organization has tax-exempt status, certain income may still be taxed. If your nonprofit has paid employees or receives any income that is unrelated to the exempt activities of the organization, it is subject to taxes on those items.
Your tax return may be seen by the public.
Nonprofit organizations are actually required to make their form 990 and exemption application available for public inspection. So in addition to the need to maintain strict compliance with the IRS, there is public scrutiny to consider as well. A CPA can help ensure that you file an accurate return.
We can offer filing assistance.
Do you need help filing taxes for your nonprofit this year? We are proud to offer professional tax planning and tax preparation services for nonprofits right here in Utah. We understand that nonprofit tax law can be complex, especially when there are so many tax exemptions to consider. Our licensed and experienced professionals can help you remain tax compliant while minimizing your tax burden. Contact our Utah tax experts today.