The Internal Revenue service issued new guidance January 13, 2011 that allows for additional small nonprofits to file a simpler tax form that contains far less information than was previously required. Small nonprofits may be able to file Form 990-N also known as an e-Postcard for their 2010 annual information reporting as long as they receive less than $50,000 per year. Read more
The Internal Revenue Service has posted information on how tax-exempt organizations can claim the Small Business Health Care Tax Credit.
In a recently updated Frequently Asked Questions page about the tax credit, the IRS stated that a tax-exempt employer as described in Section 501(c) of the Tax Code that is exempt from tax under Section 501(a) can claim the refundable credit by filing a Form 990-T with an attached Form 8941 showing the calculation of the claimed credit.
The tax credit, provided as part of the health care reform bill, is designed to encourage small employers to offer health care coverage. Qualifying employers must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate, must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible), and must pay average annual wages below $50,000. Both taxable (for profit) and tax-exempt entities qualify.
The credit is worth up to 35 percent of a small business’ premium costs in 2010 or 25 percent of a tax-exempt organization’s. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
The credit phases out gradually for entities with average wages between $25,000 and $50,000 and for entities with the equivalent of between 10 and 25 full-time workers.
For more information on the Small Business Health Care Credit and FAQs, visit IRS.gov. Please contact LMGW for any questions or assistance with claiming this tax credit.
You can help your favorite local charities or non-profit organizations by telling them about a new law that may affect their exemption from paying federal income taxes.
A few years ago, Congress passed a law requiring all tax-exempt organizations, even the smallest ones, to file an annual return with the Internal Revenue Service. Previsouly any organization with gross receipts less than $25,000 per year was exempt from any filing requirement. Any organization that does not file for three consecutive years automatically loses its federal tax exemption. Churches and some church-related organizations are among the few exceptions.
The first three-year deadline for filing those returns was May 17, 2010. While thousands of organizations did file, a significant number did not. Read more
The IRS has just released a one-time relief program for small charities. Under the one-time relief program, small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009, would be allowed to preserve their status by filing returns by October 15, 2010.
To check if your organization qualifies, check for charities located in California or the full list.
If you need assistance with your organization’s return filings, please contact LMGW.