The IRS has imposed a new law for most small tax-exempt organizations. These non-profits whose gross receipts are normally $25,000 or less during their calendar or fiscal year must now file Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations not Required To File Form 990 or 990-EZ.
Before this law was enacted, these small organizations were not required to file annually with the IRS.
All Forms 990’s are due on May 15th for calendar year filers, or by the 15th day of the fifth month after the close of the fiscal year (year ending on a date other than December 31st).
An organization that fails to file the required e-Postcards (or any Form 990) for three consecutive years will automatically lose its tax-exempt status.
I am the executive director of a charitable organization. I received an invitation to a dinner gala for a local politician running for office. Even though my organization is not donating any money to the campaign in risk of losing our exempt status, can I still attend the dinner?
Actually, attending the event given by or in honor of the politician who is running for office could be harmful to your organization’s tax exempt status if the organization paid for the ticket. If you wish to attend the dinner gala, you should purchase the ticket from your personal account, and should not represent the organization at the event.
Not-for-profits organizations, including churches and educational institutions that are exempt from federal income tax are prohibited from participating or intervening in any political campaign on behalf of, or in opposition to, any candidate for public office.
Under federal law, these organizations cannot endorse any candidates, make donations to their campaigns, engage in fund raising, distribute statements, or become involved in any other activities that may be beneficial or detrimental to any candidate. Even activities that encourage people to vote for or against a particular candidate on the basis of nonpartisan criteria violate the political campaign prohibition of section 501(c)(3).
No, once a non-profit is incorporated, they will need to apply for recognition of exemption from the IRS. Tax exempt means that the nonprofit will not pay taxes to the federal government, and any donors can take a tax deduction for their donations to the organization.
Once your organization receives the determination letter from the IRS recognizing it as a tax-exempt organization, most states like New York, require that you register with the state’s Attorney General to be recognized as a charity in good standing.
Your annual corporate income tax returns are due on March 15th for calendar year filers. Otherwise you will need to file your tax return by the 15th day of the second month after the close of your fiscal year (year ending on a date other than December 31st).
Please note: You may request a six month extension to file your income tax returns but the extension must be postmarked by the above referenced dates.
Other important dates to keep in mind:
|To Be Filed
|Partnership Tax Returns
|IRS Employer Payroll Returns
||January 31st, April 30th, July 31st, October 31st
|NYS Employer Payroll Returns
||January 31st, April 30th, July 31st, October 31st
|NYS Sales Tax Returns
||March 20th, June 20th, September 20th, December 20th
|NJ Sales Tax Returns
||January 20th, April 20th, July 20th, October 20th
I hired an assistant recently to work in my office. Do I give the individual a 1099-Misc at the end of the year?
When you hire someone to work for you, that individual will either be classified as an employee or independent contractor for tax purposes. Failure to properly classify the worker can subject you to an IRS audit and possibly hefty interest and penalties amounts for failing to withhold and deposit payroll taxes.
Some factors to take into consideration to identify an independent contractor:
- Is the worker an integral part of the business?
- Does the worker supply his/her own equipment, materials, and tools?
- Are all necessary materials to complete the work supplied by the employer?
- Does the worker control his/her own hours of employment?
- Is the work is temporary or permanent?
For more information to properly classify an individual as an employee or independent contractor, review IRS Publication 1779.
Yes there are two that you should take note of:
- You are now required to report payments to all individuals and businesses over $600 during the calendar year on Form 1099 (previously required only for non-corporate).
- Starting in 2013, employers will be required to withhold an additional .9% of Medicare tax on employee wages in excess of $200,000. And certain individuals will owe a 3.8 % unearned income Medicare contribution tax on net investment income.
The recent health care legislation of 2010 will impact your business. There are many complex rules and exceptions that you should be aware of:
- It does not require employers to provide health care coverage to employees but does include “Play or Pay” language.
- It creates a Small Business Health Options Program (SHOP exchange) that smaller businesses can use to buy health insurance coverage.
- For 2010 through 2013, there is a Small Employer Health Insurance Tax Credit (for businesses with 25 or fewer full-time employees) of up to 35% of the employers’ contribution towards employees’ coverage.
- Larger employers (average of at least 50 full-time employees) that fail to provide adequate minimum essential health care coverage will be subject to a penalty.
- Employers with more than 200 full-time employees will be required to automatically enroll employees in its health insurance plan.
- Many employers providing coverage will be required to file information about their coverage with the IRS.
- Health insurance costs must be reported on employees’ W-2 forms.
- It imposes new restrictions on FSA’s, HRA’s, HSA’s and Archer MSA’s.
For more information about your eligibility for the Small Business Health Care Tax Credit visit the IRS.
How can I find out if an organization is tax-qualified? What are some examples of deductible contributions?
You can visit the NYS Charities Bureau to search for registered organizations.
Some examples of deductible contributions include:
- Checks payable to qualified organization
- Collection plate contributions substantiated by a charity
- Credit card donations
- Charity benefit events
- Withholding from wages for charitable purposes
- Donations of:
- Real estate
- Motor vehicles, boats or planes
- Household items and clothing
- Business equipment
- Books, electronics, appliances, and furniture
*Please note you should obtain a letter of receipt for any donation over $250 and there are specific rules to each deductible item listed above.
I’m starting a new job and I don’t know how to fill out the W-4 Form so they can deduct from my paycheck. How can I get help?
The W4 Form is used to determine how much federal income tax to withhold from the employee’s wages. The IRS has set up a Withholding Calculator to help ensure individuals do not have too much or too little income tax withheld from their pay.
A qualified vehicle is defined as a car/motor vehicle (used mainly on roads & highways), boats and airplanes.
If you donate a qualified vehicle to a qualified organization and your donation is worth more than $500, you can donate depending on the following scenarios:
- If your vehicle is to be re-sold by a qualified organization, you can deduct the gross proceeds from the sale of the vehicle.
- If your vehicle is to be used by a qualified organization to fulfill their charity work, you can deduct the vehicle’s fair market value on the date of the contribution. You can find your motor vehicle’s worth at Kelley Blue Book.