Wednesday, February 20, 2019
Tax Concerns When Your Nonprofit Corporation Earns Money
This article discusses when nonprofit’s owe tax on their income. The article explains that even though nonprofits by definition exist not to make money, but to fulfill a charitable purpose, they are still able to make a profit. Whether this profit is taxed depends on if the income is related to the nonprofit’s purpose or not. When tax-exempt organizations make a profit from activities to further their purpose this profit is not taxable income. While profits made from activities that do not further the nonprofit’s purpose is considered taxable income. For example, if a 501(c)(3) organization called Friends of the Library, Inc holds a lecture series featuring famous authors, any of these profits would not be taxable income. This is because the profits made further the nonprofits purpose of furthering the appreciation of literature. To learn more about which profits can be taxed and which cannot, click here.