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An Overview of Non Profit 501 (c) 3 Tax Exempt Status

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FTAX Blog Pic An Overview of Non Profit 501 (c) 3 Tax Exempt StatusA 501 (c) 3 organization is a non profit organization that does not have to pay any taxes. According to the IRS laws, this organization can be divided into 29 different types that will not have to pay all taxes. However, this will only be so when the organization has submitted a non profit 501 (c) 3 tax exempt application and obtained the status from IRS.

What is the meaning of non profit?

A non profit organization is a type of corporation which has its main goal as aiding others and not earning profits. Such an organization helps the general public instead of focusing on their own individual benefits. As per the laws, such an organization can make a profit as well, but that is not the primary aim. Moreover, earnings which are made, must only be utilized for managing and operating the organization, and not for any other purpose.

The procedure of non profit 501 (c) 3 tax exempt application varies in every state, but is more or less the same. In some areas, it may take more time since approval from a number of agencies is required. Before you actually submit a non profit 501 (c) 3 tax exempt application, you should ask a legal professional to evaluate the situation for you.

What is the meaning of tax exempt?

A non profit organization is not always exempted from taxes. This is not so until the organization obtains the status, and IRS has no laws that state the status will be given to simply any organization. As such, even if an organization is non profit, it may not be exempted from taxes.

If an organization does receive tax exemption, it means it has the 501 (c) 3 status. 501 (c) 3 is that part of the tax laws that contains clauses related to arts and literary organizations, which do not have to pay taxes. There are other similar classifications as well, but 501 (c) 3 has stricter requirements. This is probably because any non profit tax exempt organization can also receive tax deductible contributions.

What are the requirements of the (c) 3 status?

Any organization can submit their non profit 501 (c) 3 tax exempt application only when their goals are related to education and charity. The aims of the company must be such that the public enjoys a number of benefits as per the IRS laws.

Such an organization can either choose to be a public charity or a private foundation by considering their financial sources. The differences between these two must be understood well so that no issues arrive in the future.

What are the benefits of being a non profit tax exempt organization?

  • A non profit and tax exempt organization is entitled to receive tax deductible contributions.
  • A non profit and tax exempt organization can directly apply for availing grant support from local, state and federal agencies.
  • Lower postal rates are offered to such an organization.

If you need more information about our accounting and tax services, please contact us at 407-344-1012.  Freedomtax Accounting’s staff has been providing honest accounting services and tax services for 15 years.  Our Orlando accounting and tax firm has its main offices in Kissimmee, FL.  Our services are provided nationwide, but mainly in the Central Florida market to areas like Orlando, South Orlando, Kissimmee, St. Cloud, Poinciana, Clermont, Davenport, and Hunters Creek, FL.  Our tax accountants and IRS enrolled agents (irs ea) specialize in corporate accounting and bookkeeping, tax services, tax preparation, back taxes help, tax debt relief, tax resolution, tax planning, itin numbers, incorporations, and non profit 501c3 tax exempt status applications.


Robert AcevedoAn Overview of Non Profit 501 (c) 3 Tax Exempt Status

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