Question

Are there any taxes that nonprofit organizations are not exempt for?

Answer 1

There are many types of non-profit organizations whose taxes are not totally tax-exempt. Such organizations are divided into charities and foundations. Many non-profit organizations are mostly exempt from federal and state taxes namely sales and property taxes. People donating in these organizations may get tax benefit in such cases. However this is not prevalent in some of the non-profit organizations as they cannot provide tax exemption to members. Such organizations are membership based and dues in regard to memberships is not tax-exempt. There are some non-profit organizations who creates an additional income from business to supplement their main income but it is also not related to such income. In such a case individuals who donate to such charitable organizations can avail personal tax deduction but it needs to be qualified and deductions needs to be itemized on such tax return. But in order to get tax exemption, they would have to apply for the same.

There are certain conditions which must be met for non-profit organization in order to become tax-exempt.The first condition is that it needs to be used to be a lawful purpose in either educational, charitable, religious, literary purpose. It is used for public safety. They should also not be attached to political organizations. They should not also use its income for the personal interest of their employees, relatives and associates.