fun with taxes & tax exempt status for your club gfwc ohio federation of women’s clubs annual...

FUN WITH TAXES &TAX EXEMPT STATUS FOR YOUR CLUB GFWC Ohio Federation of Women’s Clubs

Annual State Convention April 25, 2015

What is a deductible as a Charitable Contribution

• Cash donations to a Qualified organization

• www.irs.gov/Charities-&-Non-Profits/Search-for-Charities

• Non-Cash donations to a Qualified organization (Valuation Guide)

• Mileage at .14¢ per mile for 2015

(must pass the “basic test”)

THE “BASIC TEST”

To deduct amounts that you pay in giving service to a Qualified Organization:

Unreimbursed and

1. Directly connected with the services that you give and

2. Incurred only because of the service that you give and

3. Not considered personal, living or family expenses

Your time is almost never considered a charitable tax deduction

KEEP GOOD RECORDS

Write a check to the Qualified Charity whenever possible

Must have a written letter from the Charity for donations of $250.00 or more

Keep a log of your mileage when using your car for charitable purposes

Eight Tips for Deducting Charitable Contributions

1. Contribution Must be to a Qualified Organization

2. Must file Form 1040 and itemize your deductions on Schedule A

3. Deduct only excess of FMV of the benefit you receive

4. Non cash contributions are valued at FMV (Thrift- Shop Value)

5. FMV is the price property would change hands for between a buyer & seller

6. You must maintain a record of your contribution

7. Contributions over $250 must have written substantiation from the Charity

8. Donations over $5,000 must be appraised

Nonprofit vs Tax-Exempt• Nonprofit status is a state law concept

• Nonprofit status may make an organization eligible for certain benefits such as state sales tax, property and income tax exemptions

• Most tax-exempt organizations are nonprofits

• Organizing as a nonprofit at the State level does not exempt the organization from federal tax or allow contributions to that organization to be tax deductible

• Must meet requirements set forth in the Internal Revenue Code to become a tax-exempt organization

How to become a 501(c)(3) Charity

How to become a 501(c)(3) Charity

1. Apply for a Federal Identification Number

Complete Form SS-4 on-line at www.irs.gov

2. Complete Form 1023 or 1023-EZ

Application for Recognition of Exemption

3. Submit a User Fee with your application

Federal Identification Number• Be sure your organization is formed legally before you apply for an EIN

• Your organization can be formed as a:

Corporation

Limited Liability Company

Unincorporated Association or a

Trust

These are done with the Ohio Secretary of State www.sos.oh.us

“Your guide to Starting a Nonprofit in Ohio”

Required Provisions in Your Organizing Document

• Must state your exempt purpose(s)

For example charitable, religious, educational, and/or scientific purposes

• Must state that upon dissolution of your organization, your remaining assets

must be used exclusively for the exempt purpose of your club

FORM 1023 or FORM 1023-EZ

New Form 1023-EZ has recently been created for Organizations with

• $250,000 or less in Assets and

• Annual gross receipts of $50,000 or less

Download these forms at www.irs.gov

FORM 1023-EZ CONTINUED

• File this form on-line

• First complete a eligibility worksheet

• Register for an account on Pay.gov

• Enter 1023-EZ in the search box

• Complete the Form

User fee with this application will be $400

FORM 1023

• Download the Form at www.irs.gov

• Complete the Form

On-line free mini course that you can take on “Applying for Tax Exemption”

www.irs.gov/charities-&-Non-Profits/Applying-for-Exemption-Additional- Information

User fee with the application will be $850

FILING REQUIREMENTS AFTER BECOMING A 501 (c)(3)

• Form 990

Annual gross receipts greater or equal to $200,000 or

Total assets greater than or equal to $500,000

• Form 990-EZ

Annual gross receipts less than $200,000 and

Total assets less than $500,000

• Form 990-N e-Postcard

Annual gross receipts are normally $50,000 or less

AFTER YOU BECOME A 501 (c)(3)

IRS Publication 1771 – Charitable Contributions – Substantiation and

Disclosure Requirements

Recordkeeping Rules

• Bank Record (canceled check) or

• Written communication from the charity

Name of Charity

Date of Contribution

Amount of the Contribution

Written AcknowledgmentRequired for any single contribution of $250 or more

Donor’s responsibility to obtain the written acknowledgment but the Charity can help by providing the following information:

• Name of Organization

• Amount of Cash Contribution

• Description (but not the value) of non-cash contribution

• Statement that “no goods or services were provided by the organization in return for the contribution”, if that was the case

Written Acknowledgment Continued

• Description and good faith estimate of the value of goods or services, if any that an organization provided in return for the contribution

• Statement that goods or services, if any, that an organization provided in return for the contribution consisted entirely of intangible religious benefits, if that were the case

THE GFWC BRAND

The GFWC Brand is our Image to the Public

The collective GFWC identity conveys an image of friendship and Volunteer Service to our Communities

Use GFWC before your Club Name in all Communications

THE GFWC BRAND

• No need to legally change your club name to do this

• Use dba (doing business as) as an easy way to promote GFWC