Tax Deductible Contributions to Nonprofit Schools

Taxpayers can claim deductions towards their annual tax bill from donations they make to recognized 501(c)(3) organizations. Qualified 501(c)(3) groups typically include nonprofit schools operating solely for literary and education purposes.

But if the school significantly participates in activities that are unrelated to its charitable purposes, then the donation may not be tax deductible.

Here are some relevant guidelines from the IRS about donating contributions to your local nonprofit schools:

Value of School Donations
When filing your personal taxes, you can deduct the monetary value of cash or items you donated to a nonprofit school during the tax year. The process requires you to determine the fair market value of the donation on the day you gave it away.

There are various ways to find the valuation based on the type of item, and while the IRS won’t endorse one method over the other, they firmly state that the value must accurately indicate pricing that the item could sell for in an open market. An example would be donating clothes - you could check local thrift shops to find out how much the clothes would sell for or find prices from online stores selling similarly conditioned clothing.

Receiving Benefits from Nonprofit School
If the school gives you a gift or some benefit in return for your contribution, then the IRS requires you to reduce the value of your donation by the value of the gift you received from the school. The gift may be something of little to no monetary value such as a certificate, card, or plaque - in such a case, you won’t have to reduce your donation. But if the school happens to give you a $50 shopping card, you’ll need to subtract that amount from the value of your contribution.

Proof of Contribution and Penalties
Beware of filing overvalued charitable contributions. The IRS charges 20% of the underpaid tax from a valuation that exceeds 150% of its actual value and 40% from valuations exceeding 200% of normal value.

Furthermore, the IRS can deny your deduction if you don’t have proper documentation. You are responsible for maintaining a record of all your contributions - cash or items. You should have a description of the contribution and the name of the organization that received it. If your donation was cash, you should provide a bank statement, canceled check, or receipt. For large cash contributions, usually over $250, the IRS requests a written acknowledgment or receipt from the organization before deducting the donation.

Claiming tax deductible contributions towards nonprofit schools is only possible through itemizing your personal expenses. Taxpayers can claim itemized deductions on Schedule A of IRS Form 1040 if total deductible expenses are greater than standard deductions for the tax year. And for schools needing to report received contributions, you can do so by submitting a Schedule B with your IRS 990 form.

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New Year, New IRS Rules

With everything you had going on with your nonprofit during the back-to-back holiday seasons - not to mention other personal responsibilities - you might not have kept up with changes the IRS has implemented for nonprofits filing annual 990 forms.

No worries - we got you covered with the current filing requirements for tax-exempt organizations. We all know that filing late or submitting incomplete forms lead to thousands of dollars in IRS penalty fees - no group wants that. Here’s what you need to know about filing your annual tax return in 2017.

IRS Form 8868 Tax Extension
The 8868 extension form for exempt organizations has gotten reduced to a single form that grants an automatic 6-month extension of time. You can submit an extension request for the same applicable returns as before, which also means IRS Form 990-N (e-Postcard) is not eligible for an extension.

With no Part II of the 8868 form, there’s no longer a need for you to provide a reasonable explanation to gain the full 6-month extension. However, you are still limited to one extension per tax return for the filing year.

IRS Deadlines for Exempt Organizations
The changes with the 8868 extension form also bring slight changes to filing due dates. The filing deadlines aren’t necessarily different, but you should be aware that you only have two chances per year to file instead of the regular three.

For organizations operating on a calendar tax year, your filing due date is May 15. If you choose to file an extension, your extended deadline is Nov 15. There is no August deadline as there was with prior years, and if you fail to file before the November deadline, you’ll incur substantial penalties.

The filing due date for organizations running on a fiscal tax year is always the 15th day of the 5th month after your accounting period ends. If you opt for an extension at that time, you have until the end of six months to file your return - no other opportunities without late fees are available after the extended deadline.

E-file your 8868 extension form and 990 tax return quicker and easier than paper filing with ExpressTaxExempt.com. Our cloud-based application ensures that you submit a complete form, and if the IRS rejects your return, we identify the errors so you can correct them and re-transmit at no additional cost.

Contact our U.S. - based customer support team in Rock Hill, South Carolina for any questions or assistance with transmitting your return or extension form with the IRS. You can reach us at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or email us, day or night, with support@ExpressTaxExempt.com.

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Reporting Unrelated Business Income

For some exempt organizations, generating sufficient funds sometimes requires going beyond traditional fundraisers and generous contributions.

Tax-exempt groups are eligible to participate in trades and businesses with no correlation with their exemption purpose or function to bring income.

Revenue from unrelated businesses such as operating a museum or selling products is subject to corporate income tax rates. You must report the earned income on your annual tax return and pay the tax amount on time as mandated by the federal government.

Here is some valuable information about properly reporting unrelated business income to the IRS.

IRS Form 990/990-EZ and Form 990-T
If your organization’s total gross revenue from all its unrelated trades or businesses is more than $1,000 for the tax year, you must indicate it on your 990 or 990-EZ tax return. You are also responsible for filing a separate 990-T form.

IRS Form 990-T is a tax return specifically for business income from exempt organizations. The amounts of unrelated revenue and expense you report on your 990 form are the same that you report on the 990-T. Neither form substitutes the other - the IRS requires both returns to be filed if applicable.

Important: It’s mandatory for all tax-exempt groups with unrelated business income to pay estimated taxes with their return if their tax liability is expected to be more than $500. The IRS has its Form 990-W available for organizations to figure out their estimates.

Report Unrelated Income with ExpressTaxExempt
Filing unrelated business income along with the rest of your 990/990-EZ form is quick and easy at ExpressTaxExempt.com. Once you reach the proper section, indicate that your organization filed a Form 990-T for the tax year and then enter your net unrelated business taxable income from Line 34 of your 990-T - that is it!

Keep in mind that you are responsible for separately sending a Form 990-T to the IRS, and you should complete it before entering any unrelated income amounts on your 990 form or 990-EZ. You can consult with a local tax professional about filing the 990-T return.

If you have any questions or need assistance with reporting unrelated business income on your 990 tax e-file, contact our U.S. - based customer support team at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or send a request to support@ExpressTaxExempt.com.

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E-file Form 990-N Before the Year Ends!

E-file Form 990-N Before the Year Ends!

There are only two full months left within the year, and if your small tax-exempt organization needs to file a tax return, ExpressTaxExempt.com has you covered. It’s not too late to transmit your IRS Form 990-N (e-Postcard) before the end of the year!

IRS Form 990-N (e-Postcard)
The 990-N serves as an electronic notice and is for small organizations that make less than $50,000 - and that’s pretty much all you’re reporting to the IRS. There is no need for any exact amounts or schedules. The form is also electronic-only; you won’t find a paper version anywhere!

E-filing with ExpressTaxExempt.com
We make e-filing IRS Form 990-N (e-Postcard) as simple as 1-2-3! With our quick and easy steps, you can complete and transmit your form within minutes:

1. 1. Create a FREE account at ExpressTaxExempt.com
2. 2. Enter your Basic Organization Details
3. 3. Select the appropriate Tax Year
4. 4. Confirm your Gross Receipt
5. 5. Review Summary and Audit Report
6. 6. Authorize and Transmit to IRS

After submitting your 990-N, you’ll gain access to a printable copy of your e-Postcard summary and receive real-time email notification about your filing status. If the IRS rejects your e-file for any reason, we’ll identify the issue so you can make corrections and re-transmit at no extra cost!

IRS Penalties
There isn’t much of a penalty for filing Form 990-N (e-Postcard) late, which is why you still have until the end of the year to file. It doesn’t matter if your deadline was months ago - you’re still able to e-file.

There are consequences for not filing at all - fail to file for three consecutive years, and you’ll lose your tax-exempt status. You also can’t file an IRS Form 8868 extension form for e-Postcards. If you can’t file before the deadline, be sure to file as soon as possible afterward.

Important: The IRS e-filing system only supports three consecutive filing years at a time. As the new year begins, the oldest year gets dropped from support. These final two months will be the last time an organization can e-file for 2013. Your only option is to paper file IRS Form 990-EZ for any discontinued years.

Feel free to contact our U.S. - based, e-file professionals for valuable assistance or to answer questions about e-filing a 990 form. You can reach us at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or 24/7 day and night with support@ExpressTaxExempt.com.

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Trouble Finding the Right 990 Form? Let ExpressTaxExempt Make It Easy!

It’s important to know which tax return you’re required to file for your exempt organization - filing the incorrect form to the IRS gets rejected as an incomplete return, which can lead to penalties. The last thing you want is to pay thousands of dollars for a mistake that is easily avoidable.

For nonprofits, charities, and other organizations with exemption status, it’s mandatory that you correctly file the following forms with the IRS based on your organization’s gross receipts and assets:

• IRS Form 990-N (e-Postcard) - Organizations with gross receipts less than $50,000
• IRS Form 990-EZ (short form) - Organizations with gross receipts between $50,000 and $200,000, and total assets less than $500,000
• IRS Form 990 (long) - Organizations with gross receipts greater than $200,000 and total assets greater than $500,000

The Right Form with ExpressTaxExempt
Selecting the correct 990 form with ExpressTaxExempt.com couldn’t be more straightforward. If you know your organization makes less than $50,000, you can choose to e-file the “990-N (e-Postcard)” or “Form 990 Series” if your organization brings in more money.

With the “Form 990 Series” option, we simply ask what your gross receipts are - either less than $200,000 or greater than $200,000. Whichever answer you choose, the appropriate form is automatically generated for you.

And the best part - let’s say our program creates a Form 990-EZ based on your answer for gross receipts; however, the amounts you’ve entered for total revenue are over $200,000. ExpressTaxExempt.com will suggest you e-file the 990 (long) and will allow you to continue with your new form without having to start from the beginning again.

Let us help you make federal filings simple so you can get back to making your community a better place. Give our U.S. - based support professionals a call for any questions about your e-filing experience - reach us at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST. You can also message us 24/7 with support@ExpressTaxExempt.com.

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Protect your Organization from IRS Penalties!

The IRS extended deadline for exempt organizations is less than two weeks away - August 15 to be exact! If your nonprofit or charity e-filed an IRS Form 8868 back in May, then you don’t have much time to left to file and avoid penalties! Here are a few ways to prevent penalty fees with your IRS filing.

E-file Right Away
The most sure fire way to defend your exempt organization from late filing fees is to file on time with the IRS. You’ll need to complete and transmit these required forms based on specific criteria:

• IRS Form 990 - Organizations with gross receipts larger than $200,000 and total assets greater than $500,000
• IRS Form 990-EZ - Organizations with gross receipts between $50,000 and $200,000 and total assets less than $500,000

Double Check Information
Not only is it important to e-file on time, but you also need to make sure you’re reporting the correct information. An inaccurate form is the same as an incomplete form to the IRS, which can also lead to penalties. Make sure your basic organization information is current and accurate. And make an effort to fully complete parts I through XII of your tax form.

Also, know which schedules you need to file along with your form and complete them as accurately as possible. With ExpressTaxExempt.com, our internal audit check scans your form entirely for any errors so you can transmit with virtually no mistakes.

Extension to the Rescue
Unexpected situations happen all the time, but sometimes they can leave us in less favorable positions. If you know you can’t e-file on time, save yourself from IRS penalties by filing a tax extension. For the August 15 deadline, you have the option to e-file IRS Form 8868 Part 2 for an additional, non-automatic 3-month extension. Before you get your hopes up, you must follow these two eligibility rules:

1. 1. E-file an approved Form 8868 Part 1 back in May
2. 2. Provide a valid reason why you need additional time

The IRS can reject your explanation and deny your extension request, which is why this form is considered non-automatic. If you never e-filed Part 1 or got approved for it, then you are extremely late and should e-file your tax return as soon as possible.

IRS Penalties
So what are these hefty fees you’ll pay out of pocket? They can easily reach up to thousands of dollars if you’re careless. For each day your return is late, the IRS charges $20 leading up to a maximum charge of $50,000 or 5% of your total gross receipts - and that’s only if your gross receipts are less than $1 million. Larger organizations with over $1 million in gross receipts incur $100 charges per day.

With our interview-style process, ExpressTaxExempt.com guides you step by step with easy “Yes or No” questions and accessible text spaces for explanations and monetary amounts. You can complete as much or as less as you want in one sitting and continue where you left off with our cloud-based capabilities.

Contact our U.S. - based e-filing professionals for assistance with your e-filing experience. We’re available at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST. You can also reach us 24/7 with support@ExpressTaxExempt.com.

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Automatic Extension Deadline is Approaching Soon!

There are only a few weeks left before the extended IRS deadline for exempt organizations. If your tax-exempt organization operates on a calendar tax year, and you filed IRS Form 8868 Part I back in May, then you have until August 15, 2016, to file your tax return on time with the IRS.

Failing to file before your extended deadline is against IRS compliance and can lead to you paying up to thousands of dollars in late filing penalties. E-filing with the IRS is easy with ExpressTaxExempt.com. And with our service, we guide you step by step throughout the entire e-filing process so you can transmit a complete, accurate, and secure tax return.

IRS Form 990/990-EZ | IRS Form 8868 Part II
For the August 15 extended deadline, you must prepare to file either Form 990 or Form 990-EZ - the one you choose depends on your exempt organization’s gross receipts. Nonprofits or charities with gross receipts greater than $200,000 are required to file IRS Form 990, while smaller organizations with gross receipts between $50,000 and $200,000 need to file IRS Form 990-EZ.

If you’re not quite ready to file before the extended deadline, you can apply for another extension. With IRS Form 8868 Part II, you can receive an additional, non-automatic 3-month extension. You'll need to provide an explanation why you need the extra time - your reasons are either approved or rejected strictly by the IRS.

ExpressTaxExempt - Form 8868 Mobile App
E-filing for another extension is convenient as ever with our FREE downloadable ExpressTaxExempt - Form 8868 mobile app for iOS and Android smartphones and tablets. In just minutes, you can transmit your extension form to the IRS and view, download, or email a copy from your account - no need to rush to a desktop computer when you can quickly e-file on the go!

Our U.S. - based, e-filing professionals in Rock Hill, South Carolina, are available to assist with your e-file experience. Feel free to contact us at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST - get in touch with us 24/7 with support@ExpressTaxExempt.com.

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