What You Know About 501c3ez And What You Don't Know About 501c3ez.

An organization organized under section 501(c)(3) is exclusively organized for charitable, religious, educational, and scientific purposes, and may make distributions to an organization obtaining tax-exempt status under section 501(c)(3) of the Internal Revenue Code or any other corresponding provision of future federal tax laws.

What are the requirements for submitting IRS Form 1023-EZ to your charity?

To acquire 501(c)(3) federal tax-exempt status, most non-profit charities must directly contact the IRS. A charity's application, formation documents, organizational structure, history, and finances must be submitted with the long IRS Form 1023 (application for recognition of exemption), and the application fee of $600 must be paid.

Since 2014, some charities have been able to submit the simplified form 1023-EZ rather than the regular IRS form 1023. For organizations smaller than 501(c)(3), Form 1023-EZ is ashorter version of Form 1023 that can only be filed online through Pay.gov. Instead of theeleven sections in Form 1023, its six simple sections consist mainly of checklists, do not require the attachment of organizational documents, and are $275.

The 501c3EZ Offers Many Benefits

The processing time will be faster and less expensive, but the organization's budget will be limited to $50,000, which can make it difficult to apply for future grants. You can apply for EZ funding if you run an organization like a youth league, provide youth services, have a food pantry/ soup kitchen, or are an art and culture organization.

Following are the requirements for qualifying for the 501c3EZ.

  • The only organizations eligible are those with revenue and/or expenses below $50K per year.
  • There are some types of organizations not eligible for EZ. Hospitals, schools, housing companies, and foundations do not qualify for EZ if they are churches or faith-related organizations.

There are a few drawbacks to the 501c3EZ

  • The organization risks being subject to taxes on the excess (donation) or having to pay government fees if it exceeds the $50,000 revenue limit (donations) within the first three years, which will then result in higher expenditures.
  • We recommend that you consider the 501c3 standard process if you plan to make more than $50,000 in contributions within the next three years. By doing so, you may save yourself a lot of hassle in the future.

Comments

Post a Comment

Popular posts from this blog

A Guide to 501c3 Information at Any Age

Image
Section 501(c)(3) of the Internal Revenue Code gives nonprofit organizations the benefit of federal tax exemptions. This applies to organizations that are public charities, private foundations, or private operating foundations. The Internal Revenue Service oversees and administers it as a part of the US Department of Treasury. Other 501(c) organizations fall into the categories listed in 501(c)(1) to 501(c)(29). This discussion will focus on 501(c)(3) organizations with 501C3 information . States tend to have other unique provisions. Most states, like the federal government, allow deductions for state income tax purposes. Many states also exempt 501(c)(3) organizations from paying sales tax on purchases as well as from paying property taxes. To qualify nonprofit organizations with 501C3 information , the Post Office offers bulk rate discounts on postage. What is the purpose of a 501c3? Nonprofit organizations may engage in charitable, religious, educational, scientific, literary, or...
Read more

The Ultimate Guide to How Do You Set Up a 501(C)(3)?

Image
The process of starting a nonprofit organization requires several steps, such as research, planning, fundraising, etc. As well as overcoming technical, accounting, and legal obstacles. A nonprofit formation plan is one of the steps we take, which constitutes a significant portion of what we do. There are several reasons why organizations choose to apply for the 501(c)(3) setup . Step 1. Organize a nonprofit corporation on 501(c)(3) setup Forming a nonprofit corporation requires the submission of Articles of Incorporation, state documents. An organization's directors, officers, and key personnel are generally protected from liability by forming a corporation. A corporation is formed by obtaining a federal tax identification number (FEIN) from the IRS and creating bylaws that outline the rules to be followed by its board. Step 2. Register with the Internal Revenue Service to become a 501(c)(3) after 501(c)(3) setup Starting a business is more difficult than incorporating....
Read more

What are 501c3 Services?

Image
The Internal Revenue Code defines corporations, funds, and associations as nonprofit entities. Religious, charitable, religious, scientific, amateur sports, public safety testing, literary, prevent animal cruelty or prevent child abuse can all be 501(c)3 organizations. Holding companies of tax-exempt organizations are also exempt from taxation under Section 501(c)2. Religious organizations According to the IRS, religious organizations and churches in the U.S. are often tax-exempt, but they must still apply for designation as 501(c)3 organizations with 501c3 services . Tax exemption is now properly organized for religious institutions, eliminating any potential controversies. Donations to public charities In most cases, public charities receive funding from the general public, local or federal government programs, and private foundations. Among the most popular public charities in the U.S., you will find the American Red Cross, Catholic Charities USA, and the American Cancer Soc...
Read more