Posts Tagged ‘Organization’

2013-14 NBA Season Highlights ᴴᴰ

Written by admin. Posted in Blog



Highlights from the 2013-14 NBA Regular Season. Re-uploaded due to technical issues. Song is Moment 4 Life by Nicki Minaj ft. Drake.

All credit goes to NBA for footage. I do not own or intend to claim any copyrights to these clips! All of these clips are from the National Basketball Association.
Copyright Disclaimer Under Section 107 of the Copyright Act 1976, allowance is made for “fair use” for purposes such as criticism, comment, news reporting, teaching, scholarship, and research. Fair use is a use permitted by copyright statute that might otherwise be infringing. Non-profit, educational or personal use tips the balance in favor of fair use.

Tags:
NBA Reddit Highlights Mix Remix Lebron Durant Heat Thunder Kobe Wade Chicago Noah Rose Top Plays Of The Year Month Week Game Winner ESPN Buzzer Beater Toronto Raptors 2013 2014 Rudy Gay New Era Playoffs Demar Derozan Kyle Lowry Terrence Ross Amir Johnson Jonas Valanciunas Greivis Vasquez Landry Fields John Salmons Tyler Hansborough Chuck Hayes Patrick Patterson Dwane Casey Andrew Wiggins Masai Ujiri Tim Liewiki Organization Open Gym Highlights Dunk 51 Points Alley Oop Lebron James Kevin Durant Kobe Bryant Miami Heat Los Angelas Lakers Oklahoma City Thunder Boston Indiana Pacers Paul George NBA Mix DJ Fresh Longer Remix Drake Grantland Bill Simmons ESPN Sportsnet TSN TripleMKE Playoffs Dwyane Wade Chris Bosh Jeremy Lin Lithuania Canada United States Blake Griffin New York Carmelo Anthony Franchise Future JV T-Ross Boss All-Star New Orleans Valančiūnas Rebound Assist Steal Fantasy Amazing Incredible Draft Drummond

source

501(c)(3) Organization: What It Is, Pros and Cons, Examples

Written by admin. Posted in #, Financial Terms Dictionary

[ad_1]

What Is a 501(c)(3) Organization?

Section 501(c)(3) is a portion of the U.S. Internal Revenue Code (IRC) and a specific tax category for nonprofit organizations. Organizations that meet Section 501(c)(3) requirements are exempt from federal income tax. While the Internal Revenue Service (IRS) recognizes more than 30 types of nonprofit organizations, only those that qualify for 501(c)(3) status can say that donations to them are tax deductible.

Most of the organizations that may be eligible for 501(c)(3) designation fall into one of three categories: charitable organizations, churches and religious organizations, and private foundations. The rules outlined in Section 501(c)(3) are regulated by the U.S. Treasury through the IRS.

Key Takeaways

  • Section 501(c)(3) is a portion of the U.S. Internal Revenue Code (IRC) and a specific tax category for nonprofit organizations.
  • Organizations that meet the requirements of Section 501(c)(3) are exempt from federal income tax.
  • While the IRS recognizes more than 30 types of nonprofit organizations, only organizations that qualify for 501(c)(3) status can say that donations to them are tax deductible.
  • 501(c)(3) organizations must pay their employees fair market value wages.
  • To receive its favorable tax treatment, the nonprofit organization must not deviate from its purpose or mission.

What Is a 501(C) Organization?

How a 501(c)(3) Organization Works

To be considered a charitable organization by the IRS, a group must operate exclusively for one of these purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or preventing cruelty to children or animals.

Furthermore, the IRS defines “charitable” activities as “relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.”

Requirements of a 501(c)(3) Organization

To be tax exempt under Section 501(c)(3), an organization must not be serving any private interests, including the interests of the creator, the creator’s family, shareholders of the organization, other designated individuals, or other persons controlled by private interests. None of the net earnings of the organization can be used to benefit any private shareholder or individual; all earnings must be used solely for the advancement of its charitable cause.

A 501(c)(3) organization is also forbidden from using its activities to influence legislation in a substantial way, including participating in any campaign activities to support or deny any particular political candidate. It is typically not permitted to engage in lobbying (except in instances when its expenditures are below a certain amount).

People employed by the organization must be paid “reasonable compensation,” which is based on the fair market value that the job function requires.

Once an organization is categorized as a 501(c)(3), the designation remains as long as the organization exists unless it is revoked by the IRS.

To remain tax exempt under Section 501(c)(3), an organization is also required to remain true to its founding purpose. If an organization has previously reported to the IRS that its mission is to help less privileged individuals gain access to a college education, it must maintain this purpose. If it decides to engage in another calling—for example, sending relief to displaced families in poverty-stricken countries—the 501(c)(3) organization has to first notify the IRS of its change of operations to prevent the loss of its tax-exempt status.

While some unrelated business income is allowed for a 501(c)(3) organization, the tax-exempt charity may not receive substantial income from unrelated business operations. This means that the majority of the firm’s efforts must go toward its exempt purpose as a nonprofit organization. Any unrelated business from sales of merchandise or rental properties must be limited or the organization could lose its 501(c)(3) status. While the IRS doesn’t specify exactly how much is too much unrelated business income, the law firm of Hurwit & Associates, which specializes in representing nonprofits, estimates the amount at somewhere between 15% and 30%.

While organizations that meet the requirements of Section 501(c)(3) are exempt from federal income tax, they are required to withhold federal income tax from their employees’ paychecks and pay Social Security and Medicare taxes. They do not, however, have to pay federal unemployment taxes.

Special Considerations

Organizations that meet the 501(c)(3) tax category requirements can be classified into two categories: public charities and private foundations. The main distinction between these two categories is how they get their financial support. 

Public Charity

A public charity is a nonprofit organization that receives a substantial portion of its income or revenue from the general public or the government. At least one-third of its income must be received from the donations of the general public (including individuals, corporations, and other nonprofit organizations).

If an individual donates to an organization that the IRS considers to be a public charity, they may qualify for certain tax deductions that can help them lower their taxable income. Generally, the total amount of donations to a tax-exempt public charity that an individual can claim is limited to 50% of their adjusted gross income (AGI). However, there is no limitation on donations to qualified charitable organizations, such as a 501(c)(3).

Private Foundation

A private foundation is typically held by an individual, a family, or a corporation and obtains most of its income from a small group of donors. Private foundations are subject to stricter rules and regulations than public charities. All 501(c)(3) organizations are automatically classified as private foundations unless they can prove they meet the IRS standards to be considered a public charity. The deductibility of contributions to a private foundation is more limited than donations for a public charity.

To apply for tax-exempt status under Section 501(c)(3), most nonprofit organizations are required to file Form 1023 or Form 1023-EZ within 27 months from their date of incorporation. The charitable organization must include its articles of incorporation and provide documents that prove that the organization is only operating for exempt purposes.

However, not all organizations that qualify for the tax category need to submit Form 1023. For example, public charities that earn less than $5,000 in revenue per year are exempt from filing this form. Even though it is not required, they may still choose to file the form to ensure that donations made to their organization will be tax deductible for donors.

Advantages and Disadvantages of a 501(c)(3) Organization

The 501(c)(3) status offers a myriad of benefits to the designated organizations and the people they serve. For starters, 501(c)(3) organizations are exempt from paying federal income and unemployment taxes, and patrons who donate to them are allowed to claim a tax deduction for their contributions.

To help with funding and further their mission, these organizations are eligible to receive government and private grants. To qualify, the organization must have a mission aligned with the purpose of the grant and a need for it. In addition, 501(c)(3) organizations often receive discounts from retailers, free advertising by way of public service announcements, and food and supplies from other nonprofit organizations designed to help in times of need.

A 501(c)(3) could be the lifelong dream of its founder; however, once established as a 501(c)(3), it no longer belongs to its founder. Rather, it is a mission-oriented organization belonging to the public. To maintain its favorable tax treatment, it must operate within the confines of the law pertaining to 501(c)(3) organizations.

Because the organization serves the public, it must operate with full transparency. Therefore, its finances, including salaries, are available to members of the public and subject to their review.

Pros

  • Exempt from federal taxes

  • Contributions are tax deductible

  • Eligible for government and private grants

Cons

  • Does not belong to those who created it

  • Restricted to specific operations to receive tax exemptions

  • Financial information is publicly accessible

Example of a 501(c)(3) Organization

The American Red Cross, established in 1881 and congressionally chartered in 1900, is one of the United States’ oldest nonprofit organizations. Its mission statement says that the Red Cross “prevents and alleviates human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors.” Since its inception, its goal has been to serve members of the armed forces and provide aid during disasters.

Located in 191 countries, the Red Cross operates the largest network of volunteers in the world. This 501(c)(3) organization is segmented into three divisions: the National Red Cross and Red Crescent Societies, the International Federation of Red Cross and Red Crescent Societies, and the International Committee of the Red Cross.

The National Red Cross and Red Crescent Societies, which include the American Red Cross, aim to relieve human suffering globally by empowering subordinate organizations to operate within their nation’s borders to provide disaster relief, education, and other related services. The International Federation of Red Cross and Red Crescent Societies provides global humanitarian aid during peacetime, such as assisting refugees. The International Committee of the Red Cross provides humanitarian relief for people affected by war or other armed conflicts.

People who itemize their tax deductions can contribute to the Red Cross and claim the amount donated as a deduction. Taxpayers who use the standard deduction may still claim up to $600 of their 501(c)(3) contributions as a tax deduction in 2021.

How Do You Start a 501(c)(3)?

To create a 501(c)(3), you must define the type of organization and its purpose or mission. Before selecting a name, search to ensure that it is not taken. If available, secure the name by registering it with your state. Otherwise, secure the name when filing the articles of incorporation. The articles of incorporation must be filed with the state in which it will be organized and according to the state’s rules for nonprofit organizations.

After filing, apply for the 501(c)(3) IRS exemption (Form 1023) and state tax exemption for nonprofit organizations. Upon completion, create your organization’s bylaws, which specify how the organization will be structured and governed. Finally, appoint and meet with your board of directors.

How Much Does It Cost to Start a 501(c)(3)?

The costs associated with creating a 501(c)(3) vary according to the needs of the organization. However, some costs can be approximated. For example, filing the articles of incorporation with the state typically costs about $100. The IRS Form 1023 filing fee is $600. However, for organizations that expect less than $50,000 in annual earnings, Form 1023 EZ can be filed for $275.

How Long Does It Take to Get a 501(c)(3) Determination Letter?

A determination letter is sent after applying for the 501(c)(3) exemption. The IRS will only say that “applications are processed as quickly as possible” and “are processed in the order received by the IRS.” However, it does provide a list of 10 tips that can shorten the process.

Anecdotally, the website BoardEffect, which offers software designed “to make the work of their boards of directors easier, more efficient and more effective,” says it can take as little as two to four weeks if you can file Form 1023-EZ. However, those who must (or choose) to file Form 1023 will likely wait for anywhere from three to six months to get their letter, while in some cases the wait can be as long as a year.

Do You Need to Be a Corporation to Get a 501(c)(3)?

According to the IRS, to qualify for the 501(c)(3) status, the organization must be formed “as a trust, a corporation, or an association.”

What Is the Difference Between a 501(c)(3) and a 501(c)(4)?

A 501(c)(3) organization is a nonprofit organization established exclusively for one of the following purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or preventing cruelty to children or animals. These organizations are mostly prohibited from engaging in lobbying. Alternatively, 501(c)(4) organizations, which are also nonprofit, are social welfare groups and allowed to engage in lobbying.

The Bottom Line

501(c)(3) organizations are nonprofit groups with a dedicated mission. Most people are familiar with them as churches and charities, but they also include private foundations. As long as they operate to support their mission, they receive favorable tax treatment, such as avoiding federal income and unemployment taxes.

[ad_2]

Source link

501(c) Organization: What They Are, Types, and Examples

Written by admin. Posted in #, Financial Terms Dictionary

[ad_1]

What Is 501(c)?

501(c) is a designation under the United States Internal Revenue Code (IRC) that confers tax-exempt status on nonprofit organizations. Specifically, it identifies which nonprofit organizations are exempt from paying federal income tax.

The government offers this tax break to promote the presence of organizations that exist purely for the public good and help them stay afloat. Common tax-exempt organizations include charities, government entities, advocacy groups, educational and artistic groups, and religious entities. 

Key Takeaways

  • Section 501(c) of the Internal Revenue Code designates certain types of organizations as tax-exempt—they pay no federal income tax.
  • Common tax-exempt organizations include charities, government entities, advocacy groups, educational and artistic groups, and religious entities. 
  • The 501(c)(3) organization is probably the most familiar entity.
  • Donations to certain qualified tax-exempt organizations may be deductible from a taxpayer’s income.

Watch Now: What Is a 501(c) Organization?

Types of 501(c) Organizations

Under subsection 501(c), there are multiple sections that delineate the different types of tax-exempt organizations, according to their purpose and operations.

The most common include:

  • 501(c)(1): Any corporation that is organized under an act of Congress that is exempt from federal income tax
  • 501(c)(2): Corporations that hold a title of property for exempt organizations
  • 501(c)(3): Corporations, funds, or foundations that operate for religious, charitable, scientific, literary, or educational purposes
  • 501(c)(4): Nonprofit organizations that promote social welfare
  • 501(c)(5): Labor, agricultural, or horticultural associations
  • 501(c)(6): Business leagues, chambers of commerce, etc., that are not organized for profit
  • 501(c)(7): Recreational organizations

Groups that might fit the designated categories must still apply for classification as 501(c) organizations and meet all of the stipulations required by the IRS. Tax exemption is not automatic, regardless of the nature of the organization.

501(c)(3) Organizations

The 501(c)(3) organization is probably the most familiar tax category outlined in Section 501(c)(3) of the IRC. It covers the sort of nonprofits that people commonly come into contact with, and donate money to (see Special Considerations, below).

In general, there are three types of entities that are eligible for 501(c)(3) status: charitable organizations, churches/religious entities, and private foundations. 

Other Types of 501(c) Organizations

The 501(c) designation has expanded over time to encompass more types of organizations.

Other organizations that qualify for listing under this designation can potentially include:

  • Fraternal beneficiary societies that operate under the lodge system and provide for the payment of life, illness, and other benefits for their members and dependents
  • Teacher’s retirement fund associations, so long as they are local in nature and none of their net earnings grow for the benefit of a private shareholder
  • Benevolent life insurance associations that are local
  • Certain mutual cooperative electric and telephone companies
  • Nonprofit, co-op health insurers
  • Cemetery companies that are owned and operated for the exclusive benefit of their members or are not operated for profit
  • Credit unions that do not have capital stock organized
  • Insurers—aside from life insurance companies—with gross receipts that are less than $600,000
  • A variety of trusts for such purposes as providing supplement unemployment benefits and pensions
  • Organizations whose membership is made up of current and former members of the armed forces of the United States or their spouses, widows, descendants, and auxiliary units in their support

Tax-exempt organizations must file certain documents to maintain their status, as explained in IRS Publication 557.

Tax-Deductible Donations to 501(c) Organizations

In addition to being tax-exempt themselves, 501(c) organizations offer a tax advantage to others: A portion of donations they receive may be deductible from a taxpayer’s adjusted gross income (AGI). Organizations falling under section 501(c)(3)—which are primarily charities and educational or social-welfare-orientated nonprofits—are often qualified to offer this benefit to donors.

In general, an individual who itemizes deductions on their tax return may deduct contributions to most charitable organizations up to 50% (60% for cash contributions) of their AGI computed without regard to net operating loss carrybacks. Individuals generally may deduct charitable contributions to other organizations up to 30% of their AGI.

A charity or nonprofit must have 501(c)3 status if you plan to deduct your donation to it on your federal tax return. The organization itself can often tell you which sorts of donations are deductible, and to what extent—for example, if you buy a one-year museum membership for $100, $50 might be deductible.

What Is the Meaning of 501(c) Organization?

If an organization is labeled 501(c), it means it is a nonprofit organization concerned with providing a public benefit and is exempt from paying federal income taxes. The 501(c) designation encompasses many types of organizations, including charities, government entities, advocacy groups, educational and artistic groups, and religious entities. 

What Is the Difference Between a 501(c) and a 501(c)(3)?

501(c) and 501(c)(3) are two different tax categories in the Internal Revenue Code. Both are nonprofit organizations exempt from federal income tax. However, a 501(c)(3)—which consists of charitable organizations, churches/religious entities, and private foundations—can also tell its donors that they can deduct their contributions on their tax returns.

What Are the Types of Nonprofits?

The IRS has issued a long list of the type of nonprofit organizations that can qualify for 501(c) status. Common examples include charitable organizations, churches and religious organizations, social advocacy groups, and trade organizations.

The Bottom Line

Organizations that are formed strictly to help the public and not primarily to make a profit, as is the case with most businesses, are an important presence in society. The U.S. government rewards these entities with a 501(c) designation and tax-exempt status because they reduce the burden on the state and improve the lives of the population.

We aren’t just talking about charities here, either. The IRS recognizes dozens of different types of nonprofit organizations as 501(c)s, including some credit unions and insurers.

[ad_2]

Source link