Sunday, July 1, 2018

Tax Concerns When your Nonprofit Organization Earns Money

    The article begins by explaining that it’s a myth that 501(c)(3) organizations cannot make a profit. Nonprofits can make a profit, whether its taxed or not depends on whether the profit comes from activities related to the organizations purpose. If a nonprofit’s income comes from activities that are related to its tax-exempt purpose that income is not taxable income. Nonprofits can use this income to pay operating expenses, but they cannot dispense the income to their officers or directors. When nonprofits make money from things that are unrelated to their purpose, that income is called unrelated business income and that income is subject to federal taxation unless that unrelated business income is less than $1000. If the unrelated business income results in too big of an excess the IRS can revoke a nonprofit’s tax-exempt status. To read the full article, click here: 



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