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ExpressTaxExempt Blog

Tuesday, October 4, 2016

4 Surprising Tax Tips for Nonprofits

Successfully running a nonprofit or charitable group comes with many responsibilities - not only with your organization’s mission and activities, but also all the requirements to remain compliant with the federal government.

You already know to file a tax report to the IRS every year. You know that failing to do so for three straight years can void your exemption status. You know what to look for and how to report it, but here are a few less known tax tips found online that can benefit your organization in various ways.

Deductions for Volunteers
A great incentive for attracting volunteers to your organization is the tax benefits they receive for their service. Inform your volunteers how they can deduct various travel expenses such as oil changes, fuel, and mileage. Flight costs, food, lodging, and just about any other out-of-pocket expenses required for your volunteers to complete their tasks are tax deductible.

Receipts for Charitable Donations
It may be difficult at first, but try to establish a habit of writing acknowledgments for each donation your organization receives - you can create something as simple as a receipt or a “Thank You” letter that contains the following:

  • Donation amount
  • Date the donation was received
  • Proof or a reassure of exemption status
  • A statement of exchange for the donation, if necessary

You might not be obligated to acknowledge every $5 or $10 that comes to your nonprofit, but you should properly recognize anything in the hundreds of dollars or more.

Detailed Financial Documents
You never want a situation in which the IRS has you audited. But if you are, be sure you can account for every donation, expense, and revenue. With the various tax software available, you can organize and have your information readily available for any scenario. Make a habit of documenting your financial reports as soon as you get them. At the very least, it makes your tax season less stressful.

Fundraising through Crowdfunding
Though crowdfunding is proving as a viable alternative to traditional fundraising, it’s still subject to customary tax laws regarding donations. But just like regular donations, you’ll report the same information about contributions from crowdfunding. Whatever crowdfunding platform you choose, you can track donors, their monetary amounts, and even set up rewards for each donation.

Just as each nonprofit is different from the next, so is the tax situation for each exempt organization. Check with a tax advisor for any other surprising tax advantages - and when you’re ready to e-file IRS Form 990/990-EZ come to ExpressTaxExempt.com. Our streamlined, cloud-based service asks interview-style questions which report your organization’s revenue, expenses, and other activities for the year - without the time-consuming hassles of paper filing.

Contact our U.S. - based, e-file professionals for any questions or assistance with our services. You can speak with us at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST or send a message to support@ExpressTaxExempt.com.

Related Blog: Start a Nonprofit in 3 Simple Steps 


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