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Free taxes online 1. Free taxes online   Organizations Subject to the Tax Table of Contents The tax on unrelated business income applies to most organizations exempt from tax under section 501(a). Free taxes online These organizations include charitable, religious, scientific, and other organizations described in section 501(c), as well as employees' trusts forming part of pension, profit-sharing, and stock bonus plans described in section 401(a). Free taxes online In addition, the following are subject to the tax on unrelated business income. Free taxes online Individual retirement arrangements (IRAs), including traditional IRAs, Roth IRAs, Coverdell IRAs, simplified employee pensions (SEP-IRAs), and savings incentive match plans for employees (SIMPLE IRAs). Free taxes online State and municipal colleges and universities. Free taxes online Qualified state tuition programs. Free taxes online Medical savings accounts (MSAs) described in section 220(d). Free taxes online Coverdell savings accounts described in section 530. Free taxes online U. Free taxes online S. Free taxes online instrumentalities. Free taxes online   A corporation that is a U. Free taxes online S. Free taxes online instrumentality described in section 501(c)(1) is not subject to the tax on unrelated business income if the corporation is organized under an Act of Congress and, under the Act, is exempt from federal income taxes. Free taxes online Colleges and universities. Free taxes online   Colleges and universities that are agencies or instrumentalities of any government or any political subdivision of a government, or that are owned or operated by a government or political subdivision of a government, are subject to the tax on unrelated business income. Free taxes online As used here, the word government includes any foreign government (to the extent not contrary to a treaty) and all domestic governments (the United States and any of its possessions, any state, and the District of Columbia). Free taxes online   The tax is on the unrelated business income of both the universities and colleges themselves and on their wholly owned tax exempt subsidiary organizations. Free taxes online It is immaterial whether the business is conducted by the university or by a separately incorporated wholly owned subsidiary. Free taxes online If the business activity is unrelated, the income in both instances will be subject to the tax. Free taxes online If the primary purpose of a wholly owned subsidiary is to operate or conduct any unrelated trade or business (other than holding title to property and collecting income from it), the subsidiary is not an exempt organization, and this rule does not apply. Free taxes online Title-holding corporations. Free taxes online   When an exempt title-holding corporation, described in section 501(c)(2), pays any of its net income to an organization that itself is exempt from tax under section 501(a) (or would pay such an amount except that the expenses of collecting its income exceed the amount collected) and files a consolidated return with that organization, the title-holding corporation is treated, for unrelated business income tax purposes, as organized and operated for the same purposes as the exempt payee organization. Free taxes online   Thus, a title-holding corporation whose source of income is related to the exempt purposes of the payee organization is not subject to the unrelated business income tax if the holding corporation and the payee organization file a consolidated return. Free taxes online However, if the source of the income is not so related, the title-holding corporation is subject to unrelated business income tax. Free taxes online Example. Free taxes online X, a title-holding corporation, is required to distribute its net income to A, an exempt organization. Free taxes online During the tax year, X realizes net income of $900,000 from source M, which is related to A's exempt function. Free taxes online X also receives $100,000 from source N, which is not related to A's exempt function. Free taxes online X and A file a consolidated return for the tax year. Free taxes online X has unrelated business income of $100,000. Free taxes online Prev  Up  Next   Home   More Online Publications
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    The Internet Crime Complain Center has received a significant number of recent complaints regarding Internet auction fraud involving the sale of automobiles purported to be located outside of the United States. The typical fraud involves an auction for a vehicle said to be in Europe, and for which the buyer pays with Western Union or other wire transfer mechanism. The buyer does not receive his or her automobile in these auctions, and the money is not recoverable.
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Free taxes online 2. Free taxes online   Filing Requirements and Required Disclosures Table of Contents Introduction Topics - This chapter discusses: Useful Items - You may want to see: Annual Information ReturnsSupporting Organization Annual Information Return Unrelated Business Income Tax ReturnEstimated tax. Free taxes online Employment Tax ReturnsException. Free taxes online FUTA tax exception. Free taxes online FICA tax exemption election. Free taxes online Revoking the election. Free taxes online Definitions. Free taxes online Effect on employees. Free taxes online Political Organization Income Tax ReturnExempt function. Free taxes online Political organization taxable income. Free taxes online Separate fund. Free taxes online Failure to file. Free taxes online Failure to pay on time. Free taxes online Reporting Requirements for a Political OrganizationForm 8871 Form 8872 Donee Information ReturnCharitable deduction property. Free taxes online Publicly traded securities. Free taxes online Exceptions. Free taxes online Form 8283. Free taxes online Information Provided to DonorsDisclosure of Quid Pro Quo Contributions Acknowledgment of Charitable Contributions of $250 or More Acknowledgment of Vehicle Contribution Qualified Intellectual Property Report of Cash Received Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting FormsAnnual Information Return Public Inspection of Exemption Application Political Organization Reporting Forms Required DisclosuresSolicitation of Nondeductible Contributions Sales of Information or Services Available Free From Government Dues Used for Lobbying or Political Activities Prohibited Tax Shelter Transactions Miscellaneous RulesOrganizational Changes and Exempt Status Introduction Most exempt organizations (including private foundations) must file various returns and reports at some time during (or following the close of) their accounting period. Free taxes online Topics - This chapter discusses: Annual information returns Unrelated business income tax return Employment tax returns Political organization income tax return Reporting requirements for a political organization Donee information return Information provided to donors Report of cash received Public inspection of exemption applications, annual returns, and political organizations reporting forms Required disclosures Miscellaneous rules Useful Items - You may want to see: Publication 15 Circular E, Employer's Tax Guide 15-A Employer's Supplemental Tax Guide 15-B Employer's Tax Guide to Fringe Benefits 598 Tax on Unrelated Business Income of Exempt Organizations Form (and Instructions) 941 Employer's Quarterly Federal Tax Return 990 Return of Organization Exempt From Income Tax 990-EZ Short Form Return of Organization Exempt From Income Tax Schedule A (Form 990 or 990-EZ) Public Charity Status and Public Support Schedule B (Form 990, 990-EZ, or 990-PF) Schedule of Contributors Schedule C (Form 990 or 990-EZ) Political Campaign and Lobbying Activities Schedule D (Form 990) Supplemental Financial Statements Schedule E (Form 990 or 990-EZ) Schools Schedule F (Form 990) Statement of Activities Outside the United States Schedule G (Form 990 or 990-EZ) Supplemental Information Regarding Fundraising or Gaming Activities Schedule H (Form 990) Hospitals Schedule I (Form 990) Grants and Other Assistance to Organizations, Governments, and Individuals in the United States Schedule J (Form 990) Compensation Information Schedule K (Form 990) Supplemental Information on Tax-Exempt Bonds Schedule L (Form 990 or 990-EZ) Transactions With Interested Persons Schedule M (Form 990) Noncash Contributions Schedule N (Form 990 or 990-EZ) Liquidation, Termination, Dissolution, or Significant Disposition of Assets Schedule O (Form 990 or 990-EZ) Supplemental Information to Form 990 Schedule R (Form 990) Related Organizations and Unrelated Partnerships 990-PF Return of Private Foundation or Section 4947(a)(1) Nonexempt Charitable Trust Treated as a Private Foundation 990-BL Information and Initial Excise Tax Return for Black Lung Benefit Trusts and Certain Related Persons 990-T Exempt Organization Business Income Tax Return 990-W Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations 1120-POL U. Free taxes online S. Free taxes online Income Tax Return for Certain Political Organizations 4720 Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code 5768 Election/Revocation of Election by an Eligible Section 501(c)(3) Organization To Make Expenditures To Influence Legislation 6069 Return of Excise Tax on Excess Contributions to Black Lung Benefit Trust Under Section 4953 and Computation of Section 192 Deduction 7004 Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns 8274 Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption from Employer Social Security and Medicare Taxes 8282 Donee Information Return 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business 8453-X Political Organization Declaration for Electronic Filing of Notice of Section 527 Status 8822-B Change of Address-Business 8868 Application for Extension of Time to File an Exempt Organization Return 8870 Information Return for Transfers Associated with Certain Personal Benefits Contracts 8871 Political Organization Notice of Section 527 Status 8872 Political Organization Report of Contributions and Expenditures 8886-T Disclosure by Tax-Exempt Entity Regarding Prohibited Tax Shelter Transaction 8899 Notice of Income from Donated Intellectual Property 8940 Request for Miscellaneous Determination See chapter 6 for information about getting these publications and forms. Free taxes online Annual Information Returns Every organization exempt from federal income tax under section 501(a) must file an Annual Exempt Organization Return except: A church, an interchurch organization of local units of a church, a convention or association of churches, An integrated auxiliary of a church, A church-affiliated organization that is exclusively engaged in managing funds or maintaining retirement programs, A school below college level affiliated with a church or operated by a religious order, Church-affiliated mission societies if more than half of their activities are conducted in, or are directed at persons in, foreign countries, An exclusively religious activity of any religious order, A state institution, the income of which is excluded from gross income under section 115, A corporation described in section 501(c)(1) that is organized under an Act of Congress, an instrumentality of the United States, and is exempt from Federal income taxes, A stock bonus, pension, or profit-sharing trust that qualifies under section 401 (required to file Form 5500, Annual Return/Report of Employee Benefit Plan), A religious or apostolic organization described in section 501(d) (required to file Form 1065, U. Free taxes online S. Free taxes online Return of Partnership Income), A governmental unit or an affiliate of a governmental unit that meets the requirements of Revenue Procedure 95-48, 1995-2 C. Free taxes online B. Free taxes online 418, www. Free taxes online irs. Free taxes online gov/pub/irs-tege/rp1995-48. Free taxes online pdf, A private foundation described in section 501(c)(3) and exempt under section 501(a) (required to file Form 990-PF, Return of Private Foundation), A political organization that is a state or local committee of a political party, a political committee of a state or local candidate, a caucus or association of state or local officials, or required to report under the Federal Election Campaign Act of 1971 as a political committee, An exempt organization (other than a private foundation) that normally has annual gross receipts of $50,000 or less, or A foreign organization, or an organization located in a U. Free taxes online S. Free taxes online possession, that normally has annual gross receipts from sources within the United States of $50,000 or less. Free taxes online Supporting Organization Annual Information Return For tax years ending after August 17, 2006, all section 509(a)(3) supporting organizations are required to file Form 990 or 990-EZ with the IRS regardless of the organization's gross receipts, unless it qualifies as one of the following: An integrated auxiliary of a church; The exclusively religious activities of a religious order; or An organization, the gross receipts of which are normally not more than $5,000, that supports a section 509(a)(3) religious order. Free taxes online If the organization is described in item (3) above, then it must submit Form 990-N (e-Postcard) unless it voluntarily files Form 990 or 990-EZ. Free taxes online On its annual information return, at Part I, Schedule A (Form 990 or 990-EZ) a supporting organization must: List the section 509(a)(3) organizations to which it provides support, Indicate whether it is a Type I, Type II, or Type III supporting organization, and Certify that the organization is not controlled directly or indirectly by disqualified persons (other than by foundation managers and other than one or more publicly supported organizations). Free taxes online Annual Electronic Filing Requirement for Small Tax-Exempt Organizations Small tax-exempt organizations with annual gross receipts normally $50,000 or less must submit Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ, with the IRS each year, if they choose not to file a Form 990 or 990-EZ. Free taxes online Form 990-N requires the following information: The organization's legal name, and mailing address; Any name under which it operates and does business; Its Internet website address (if any); Its taxpayer identification number; The name and address of a principal officer; Organization's annual tax period; Verification that the organization's annual gross receipts are normally $50,000 or less; and Notification if the organization has terminated. Free taxes online Form 990-N is due by the 15th day of the fifth month after the close of the tax year. Free taxes online For tax years beginning after December 31, 2006, any organization that fails to meet its annual reporting requirement for 3 consecutive years will automatically lose its tax-exempt status. Free taxes online To regain its exempt status an organization will have to reapply for recognition as a tax-exempt organization. Free taxes online Exceptions. Free taxes online   This filing requirement does not apply to: Churches, their integrated auxiliaries, and conventions or associations of churches; Organizations that are included in a group return; Private foundations required to file Form 990-PF; and Section 509(a)(3) supporting organizations required to file Form 990 or Form 990-EZ. Free taxes online Forms 990 and 990-EZ Exempt organizations, other than private foundations, must file their annual information returns on Form 990 or 990-EZ, unless excepted from filing or allowed to submit Form 990-N, described earlier. Free taxes online Generally, political organizations with gross receipts of $25,000 ($100,000 for a qualified state or local political organization (QSLPO)) or more for the tax year are required to file Form 990 or 990-EZ unless specifically excepted from filing the annual return. Free taxes online The following political organizations are not required to file Form 990 or Form 990-EZ. Free taxes online A state or local committee of a political party. Free taxes online A political committee of a state or local candidate. Free taxes online A caucus or association of state or local officials. Free taxes online A political organization that is required to report as a political committee under the Federal Election Campaign Act. Free taxes online A 501(c) organization that has expenditures for influencing or attempting to influence the selection, nomination, election, or appointment of any individual for a federal, state, or local public office. Free taxes online Form 990-EZ. Free taxes online   This is a shortened version of Form 990. Free taxes online It is designed for use by small exempt organizations and nonexempt charitable trusts. Free taxes online   Beginning in tax year 2010, an organization can file either Form 990 or 990-EZ if it meets the following: Its gross receipts during the year are less than $200,000. Free taxes online Its total assets (line 25, column (B) of Form 990-EZ) at the end of the year are less than $500,000. Free taxes online If your organization does not meet either of these conditions, you cannot file Form 990-EZ. Free taxes online Instead you must file Form 990. Free taxes online Group return. Free taxes online   A group return on Form 990 may be filed by a central, parent, or like organization for two or more local organizations, none of which is a private foundation. Free taxes online This return is in addition to the central organization's separate annual return if it must file a return. Free taxes online It cannot be included in the group return. Free taxes online See the instructions for Form 990 for the conditions under which this procedure may be used. Free taxes online    In any year that an organization is properly included as a subordinate organization on a group return, it should not file its own Form 990. Free taxes online Schedule A (Form 990 or 990-EZ). Free taxes online   Organizations, other than private foundations, that are described in section 501(c)(3) and that are otherwise required to file Form 990 or 990-EZ must also complete Schedule A of that form. Free taxes online Schedule B (Form 990, Form 990-EZ, or 990-PF). Free taxes online   Organizations that file Form 990 or 990-EZ use this schedule to provide required information regarding their contributors. Free taxes online Schedule O (Form 990). Free taxes online   Organizations that file Form 990 must use this schedule to provide required additional information or if additional space is needed. Free taxes online   Other schedules may be required to be filed with Form 990 or 990-EZ. Free taxes online See the instructions for Form 990 or the instructions for Form 990-EZ for more information. Free taxes online Report significant new or changed program services and changes to organizational documents. Free taxes online    An organization should report new significant program services or significant changes in how it conducts program services, and significant changes to its organizational documents, on its Form 990 rather than in a letter to EO Determinations. Free taxes online EO Determinations no longer issues letters confirming the tax-exempt status of organizations that report new services or significant changes, or changes to organizational documents. Free taxes online See Miscellaneous Rules, Organization Changes and Exempt Status, later. Free taxes online Form 990-PF All private foundations exempt under section 501(c)(3) must file Form 990-PF. Free taxes online These organizations are discussed in chapter 3. Free taxes online Electronic Filing You may be required to file Form 990, Form 990-EZ, or Form 990-PF, and related forms, schedules, and attachments electronically. Free taxes online If an organization is required to file a return electronically but does not, the organization is considered to have not filed its return. Free taxes online See Regulations section 301. Free taxes online 6033-4 for more information. Free taxes online The IRS may waive the requirement to file electronically in cases of undue hardship. Free taxes online For information on filing a waiver, see Notice 2010-13, 2010-4 I. Free taxes online R. Free taxes online B. Free taxes online 327, available at www. Free taxes online irs. Free taxes online gov/ir/2010-04_IRSB/ar14. Free taxes online html. Free taxes online Form 990. Free taxes online   An organization is required to file Form 990 electronically if it files at least 250 returns during the calendar year and has total assets of $10 million or more at the end of the tax year. Free taxes online Form 990-PF. Free taxes online   An organization is required to file Form 990-PF electronically if it files at least 250 returns during the calendar year. Free taxes online Due Date Forms 990, 990-EZ, or 990-PF must be filed by the 15th day of the fifth month after the end of your organization's accounting period. Free taxes online Thus, for a calendar year taxpayer, Forms 990, 990-EZ, or 990-PF is due May 15 of the following year. Free taxes online Extension of time to file. Free taxes online   Use Form 8868 to request an automatic 3-month extension of time to file Forms 990, 990-EZ, or 990-PF and also to apply for an additional (not automatic) 3-month extension if needed. Free taxes online   Do not apply for both the automatic 3-month extension and the additional 3-month extension at the same time. Free taxes online For more information, see Form 8868 and its instructions. Free taxes online   When filing Form 8868 for an automatic 3-month extension, neither a signature, nor an explanation is required. Free taxes online However, when filing Form 8868 for an additional 3-month extension, both a signature and an explanation are required. Free taxes online Application for exemption pending. Free taxes online   An organization that claims to be exempt under section 501(a) but has not established its exempt status by the due date for filing an information return must complete and file Form 990, 990-EZ, 990–N or 990-PF (if it considers itself a private foundation), unless the organization is exempt from Form 990-series filing requirements. Free taxes online If the organization's application is pending with the IRS, it must so indicate on Forms 990, 990-EZ, or 990-PF (whichever applies) by checking the application pending block at the top of page 1 of the return. Free taxes online For more information on the filing requirements, see the Instructions for Forms 990, 990-EZ, and 990-PF. Free taxes online State reporting requirements. Free taxes online   Copies of Forms 990, 990-EZ, or 990-PF may be used to satisfy state reporting requirements. Free taxes online See the instructions for those forms. Free taxes online Form 8870. Free taxes online   Organizations that filed a Form 990, 990-EZ, or 990-PF, and paid premiums or received transfers on certain life insurance, annuity, and endowment contracts (personal benefit contracts), must file Form 8870. Free taxes online For more information, see Form 8870 and the instructions for that form. Free taxes online Automatic Revocation If the organization fails to file a Form 990, 990-EZ, or 990-PF, or fails to submit a Form 990-N, as required, for 3 consecutive years, it will automatically lose its tax-exempt status by operation of law. Free taxes online The list of organizations whose tax-exempt status has been automatically revoked is available on IRS. Free taxes online gov. Free taxes online This list (Auto-Revocation List) may be viewed and searched on Exempt Organizations Select Check. Free taxes online The Auto-Revocation List includes each organization's name, Employer Identification Number (EIN) and last known address. Free taxes online It also includes the effective date of the automatic revocation and the date it was posted to the list. Free taxes online The IRS updates the list monthly to include additional organizations that lose their tax-exempt status. Free taxes online Tax Effect of Loss of Tax-Exempt Status If your organization’s tax-exempt status is automatically revoked, you may be required to file one of the following federal income tax returns and pay any applicable income taxes: Form 1120, U. Free taxes online S. Free taxes online Corporation Income Tax Return, due by the 15th day of the 3rd month after the end of your organization’s tax year, or Form 1041, U. Free taxes online S. Free taxes online Income Tax Return for Estates and Trusts, due by the 15th day of the 4th month after the end of your organization’s tax year. Free taxes online In addition, a section 501(c)(3) organization that loses its tax-exempt status cannot receive tax-deductible contributions and will not be identified in the IRS Business Master File extract as eligible to received tax-deductible contributions, or be included in Exempt Organizations Select Check (Pub 78 database). Free taxes online An organization whose exemption was automatically revoked must apply for tax exemption in order to regain its tax exemption (even if it was not originally required to apply). Free taxes online In some situations, an organization may be able to obtain exemption retroactive to its date of revocation. Free taxes online For more information about automatic revocation, go to IRS. Free taxes online gov and select Charities & Non-Profits and then select Revoked? Reinstated? Learn More. Free taxes online Penalties Penalties for failure to file. Free taxes online   Generally, an exempt organization that fails to file a required return must pay a penalty of $20 a day for each day the failure continues. Free taxes online The same penalty will apply if the organization does not give all the information required on the return or does not give the correct information. Free taxes online Maximum penalty. Free taxes online   The maximum penalty for any one return is the smaller of $10,000 or 5% of the organization's gross receipts for the year. Free taxes online Organization with gross receipts over $1 million. Free taxes online   For an organization that has gross receipts of over $1 million for the year, the penalty is $100 a day up to a maximum of $50,000. Free taxes online Managers. Free taxes online   If the organization is subject to this penalty, the IRS may specify a date by which the return or correct information must be supplied by the organization. Free taxes online Failure to comply with this demand will result in a penalty imposed upon the manager of the organization, or upon any other person responsible for filing a correct return. Free taxes online The penalty is $10 a day for each day that a return is not filed after the period given for filing. Free taxes online The maximum penalty imposed on all persons with respect to any one return is $5,000. Free taxes online Exception for reasonable cause. Free taxes online   No penalty will be imposed if reasonable cause for failure to file timely can be shown. Free taxes online Unrelated Business Income Tax Return Even though your organization is recognized as tax exempt, it still may be liable for tax on its unrelated business income. Free taxes online Unrelated business income is income from a trade or business, regularly carried on, that is not substantially related to the charitable, educational, or other purpose that is the basis for the organization's exemption. Free taxes online If your organization has $1,000 or more of unrelated business income, you must file Form 990-T in addition to your required annual information return. Free taxes online Estimated tax. Free taxes online   Quarterly estimated tax payments are due if your organization expects to owe $500 or more in tax including unrelated business income. Free taxes online Use Form 990-W to figure your organization's estimated tax payments. Free taxes online Travel tour programs. Free taxes online   Travel tour activities that are a trade or business are an unrelated trade or business if the activities are not substantially related to the purpose to which tax exemption was granted to the organization. Free taxes online   Whether travel tour activities conducted by an organization are substantially related to the organization's tax exempt purpose is determined by looking at all the relevant facts and circumstances, including, but not limited to, how a travel tour is developed, promoted, and operated. Free taxes online Example. Free taxes online ABC, a university alumni association, is tax exempt as an educational organization under section 501(c)(3). Free taxes online As part of its activities, ABC operates a travel tour program. Free taxes online The program is open to all current members of ABC and their guests. Free taxes online ABC works with travel agents to schedule approximately ten tours annually to various destinations around the world. Free taxes online Members of ABC pay $1,000 to XYZ Travel Agency to participate in a tour. Free taxes online XYZ pays ABC a per person fee for each participant. Free taxes online Although the literature advertising the tours encourages ABC members to continue their lifelong learning by joining the tours, and a faculty member of ABC's related university frequently joins the tour as a guest of the alumni association, none of the tours include any scheduled instruction or curriculum related to the destinations being visited. Free taxes online The travel tours made available to ABC's members do not contribute importantly to the accomplishment of ABC's educational purpose. Free taxes online Rather, ABC's program is designed to generate revenues for ABC by regularly offering its members travel services. Free taxes online Therefore, ABC's tour program is an unrelated trade or business. Free taxes online For additional information on unrelated business income, see Publication 598 and the Instructions for Form 990-T. Free taxes online Employment Tax Returns Every employer, including an organization exempt from federal income tax, who pays wages to employees is responsible for withholding, depositing, paying, and reporting federal income tax, social security and Medicare (FICA) taxes, and federal unemployment tax (FUTA), unless that employer is specifically excepted by law from those requirements, or if the taxes clearly do not apply. Free taxes online For more information, obtain a copy of Publication 15, which summarizes the responsibilities of an employer, Publication 15-A, Publication 15-B, and Form 941. Free taxes online Small Business Health Care Tax Credit. Free taxes online   If your small tax-exempt organization provides health care coverage for your workers you may qualify for the small business health care tax credit. Free taxes online Go to IRS. Free taxes online gov and select Affordable Care Act Tax Provisions for more details. Free taxes online See Small Business Health Care Tax Credit at www. Free taxes online irs. Free taxes online gov/newsroom/article/0,,id=223666,00. Free taxes online html. Free taxes online Expanded Work Opportunity Tax Credit Available for Hiring Qualified Veterans. Free taxes online   The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC). Free taxes online The Act added two new categories to the existing qualified veteran targeted group and made the WOTC available to certain tax-exempt employers as a credit against the employer's share of social security tax. Free taxes online The Act allows employers to claim the WOTC for veterans certified as qualified veterans and who begin work before January 1, 2013. Free taxes online This tax credit was extended through December 31, 2013, under the American Taxpayer Relief Act, passed on January 1, 2013. Free taxes online   The credit can be as high as $6,240 for qualified tax-exempt organizations. Free taxes online The amount of the credit depends on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. Free taxes online The amount of the credit for qualified tax-exempt organizations may not exceed the organization's employer social security tax for the period for which the credit is claimed. Free taxes online   All employers must obtain certification that an individual is a member of the targeted group, before the employer may claim the credit. Free taxes online The process for certifying veterans for this credit is the same for all employers. Free taxes online For more information, see Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit and the instructions to Form 8850. Free taxes online Notice 2012-13, 2012-9 I. Free taxes online R. Free taxes online B. Free taxes online 421, also provides additional guidance on submission Form 8850. Free taxes online   Organizations described in section 501(c) and exempt from taxation under section 501(a) may claim the credit for qualified veterans who begin work on or after Nov. Free taxes online 22, 2011, and before January 1, 2013. Free taxes online After the required certification is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans, Form 5884-C. Free taxes online File Form 5884-C after filing the related employment tax return for the employment tax period for which the credit is claimed. Free taxes online It is recommended that qualified tax-exempt employers do not reduce their required deposits in anticipation of any credit as the forms are processed separately. Free taxes online In addition to Form 5884-C and its instructions, tax-exempt employers should see Notice 2012-13 and the Frequently Asked Questions & Answers for more details for claiming the credit. Free taxes online Trust fund recovery penalty. Free taxes online   If any person required to collect, truthfully account for, and pay over any of these taxes willfully fails to satisfy any of these requirements or willfully tries in any way to evade or defeat any of them, that person will be subject to a penalty. Free taxes online The penalty is equal to the tax evaded, not collected, or not accounted for and paid over. Free taxes online The term person includes: An officer or employee of a corporation, or A member or employee of a partnership. Free taxes online Exception. Free taxes online   The penalty is not imposed on any unpaid volunteer director or member of a board of trustees of an exempt organization if the unpaid volunteer serves solely in an honorary capacity, does not participate in the day-to-day or financial operations of the organization, and does not have actual knowledge of the failure on which the penalty is imposed. Free taxes online   This exception does not apply if it results in no one being liable for the penalty. Free taxes online FICA and FUTA tax exceptions. Free taxes online   Payments for services performed by a minister of a church in the exercise of the ministry, or a member of a religious order performing duties required by the order, are generally not subject to FICA or FUTA taxes. Free taxes online FUTA tax exception. Free taxes online   Payments for services performed by an employee of a religious, charitable, educational, or other organization described in section 501(c)(3) that are generally subject to FICA taxes if the payments are $100 or more for the year, are not subject to FUTA taxes. Free taxes online FICA tax exemption election. Free taxes online   Churches and qualified church-controlled organizations can elect exemption from employer FICA taxes by filing Form 8274. Free taxes online   To elect the exemption, Form 8274 must be filed before the first date on which a quarterly employment tax return would otherwise be due from the electing organization. Free taxes online The organization can make the election only if it is opposed for religious reasons to the payment of FICA taxes. Free taxes online   The election applies to payments for services of current and future employees other than services performed in an unrelated trade or business. Free taxes online Revoking the election. Free taxes online   The election can be revoked by the IRS if the organization fails to file Form W-2, Wage and Tax Statement, for 2 years and fails to furnish certain information upon request by the IRS. Free taxes online Such revocation will apply retroactively to the beginning of the 2-year period. Free taxes online Definitions. Free taxes online   For purposes of this election, the term church means a church, a convention or association of churches, or an elementary or secondary school that is controlled, operated, or principally supported by a church or by a convention or association of churches. Free taxes online   The term qualified church-controlled organization means any church-controlled section 501(c)(3) tax-exempt organization, other than an organization that both: Offers goods, services, or facilities for sale, other than on an incidental basis, to the general public at other than a nominal charge that is substantially less than the cost of providing such goods, services, or facilities, and Normally receives more than 25% of its support from the sum of governmental sources and receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in activities that are not unrelated trades or businesses. Free taxes online Effect on employees. Free taxes online   If a church or qualified church-controlled organization has made an election, payment for services performed for that church or organization, other than in an unrelated trade or business, will not be subject to FICA taxes. Free taxes online However, the employee, unless otherwise exempt, will be subject to self-employment tax on the income. Free taxes online The tax applies to income of $108. Free taxes online 28 or more for the tax year from that church or organization, and no deductions for trade or business expenses are allowed against this self-employment income. Free taxes online   Schedule SE (Form 1040), Self-Employment Tax, should be attached to the employee's income tax return. Free taxes online Political Organization Income Tax Return Generally, a political organization is treated as an organization exempt from tax. Free taxes online Certain political organizations, however, must file an annual income tax return, Form 1120-POL, U. Free taxes online S. Free taxes online Income Tax Return for Certain Political Organizations, for any year they have political organization taxable income in excess of the $100 specific deduction allowed under section 527. Free taxes online A political organization that has $25,000 ($100,000 for a qualified state or local political organization) or more in gross receipts for the tax year must file Form 990 or Form 990-EZ (and Schedule B of the form), unless excepted. Free taxes online See Forms 990 and 990-EZ , earlier. Free taxes online Political organization. Free taxes online   A political organization is a party, committee, association, fund, or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function. Free taxes online Exempt function. Free taxes online   An exempt function means influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any federal, state, local public office or office in a political organization, or the election of the Presidential or Vice Presidential electors, whether or not such individual or electors are selected, nominated, elected, or appointed. Free taxes online It also includes certain office expenses of a holder of public office or an office in a political organization. Free taxes online Certain political organizations are required to notify the IRS that they are section 527 organizations. Free taxes online These organizations must use Form 8871. Free taxes online Some of these section 527 organizations must use Form 8872 to file periodic reports with the IRS disclosing their contributions and expenditures. Free taxes online For a discussion on these forms, see Reporting Requirements for a Political Organization, later. Free taxes online Political organization taxable income. Free taxes online   Political organization taxable income is the excess of: Gross income for the tax year (excluding exempt function income) minus Deductions directly connected with the earning of gross income. Free taxes online To figure taxable income, allow for a $100 specific deduction, but do not allow for the net operating loss deduction, the dividends-received deduction, and other special deductions for corporations. Free taxes online Exempt organization not a political organization. Free taxes online   An organization exempt under section 501(c) that spends any amount for an exempt function must file Form 1120-POL for any year which it has political taxable income. Free taxes online These organizations must include in gross income the lesser of: The total amount of its exempt function expenditures, or The organization's net investment income. Free taxes online Separate fund. Free taxes online   A section 501(c) organization can set up a separate segregated fund that will be treated as an independent political organization. Free taxes online The earnings and expenditures made by the separate fund will not be attributed to the section 501(c) organization. Free taxes online Section 501(c)(3) organizations are precluded from, and may suffer loss of exemption for, engaging in any political campaign on behalf of, or in opposition to, any candidate for public office. Free taxes online Due date. Free taxes online   Form 1120-POL is due by the 15th day of the 3rd month after the end of the tax year. Free taxes online Thus, for a calendar year taxpayer, Form 1120-POL is due on March 15 of the following year. Free taxes online If any due date falls on a Saturday, Sunday, or legal holiday, the organization can file the return on the next business day. Free taxes online    Form 1120-POL is not required of an exempt organization that makes expenditures for political purposes if its gross income does not exceed its directly connected deductions by more than $100 for the tax year. Free taxes online Extension of time to file. Free taxes online    Use Form 7004 to request an automatic 6-month extension of time to file Form 1120-POL. Free taxes online The extension will be granted if you complete Form 7004 properly, make a proper estimate of the tax (if applicable), file Form 1120-POL by the due date, and pay any tax due. Free taxes online Failure to file. Free taxes online   A political organization that fails to file Form 1120-POL is subject to a penalty equal to 5% of the tax due for each month (or partial month) the return is late up to a maximum of 25% of the tax due, unless the organization shows the failure was due to reasonable cause. Free taxes online For more information about filing Form 1120-POL, refer to the instructions accompanying the form. Free taxes online Failure to pay on time. Free taxes online   An organization that does not pay the tax when due generally may have to pay a penalty of 1/2 of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. Free taxes online The penalty will not be imposed if the organization can show that the failure to pay on time was due to reasonable cause. Free taxes online Reporting Requirements for a Political Organization Certain political organizations are required to notify the IRS that the organization is to be treated as a section 527 political organization. Free taxes online The organization is also required to periodically report certain contributions received and expenditures made by the organization. Free taxes online To notify the IRS of section 527 treatment, an organization must file Form 8871. Free taxes online To report contributions and expenditures, certain tax-exempt political organizations must file Form 8872. Free taxes online Form 8871 A political organization must electronically file Form 8871 to notify the IRS that it is to be treated as a section 527 organization. Free taxes online However, an organization is not required to file Form 8871 if: It reasonably expects its annual gross receipts to always be less than $25,000. Free taxes online It is a political committee required to report under the Federal Election Campaign Act of 1971 (FECA) (2 U. Free taxes online S. Free taxes online C. Free taxes online 431(4)). Free taxes online It is a state or local candidate committee. Free taxes online It is a state or local committee of a political party. Free taxes online It is a section 501(c) organization that has made an “exempt function expenditure. Free taxes online ” All other political organizations are required to file Form 8871. Free taxes online An organization must provide on Form 8871: Its name and address (including any business address, if different) and its electronic mailing address; Its purpose; The names and addresses of its officers, highly compensated employees, contact person, custodian of records, and members of its board of directors; The name and address of, and relationship to, any related entities (within the meaning of section 168(h)(4)); and Whether it intends to claim an exemption from filing Form 8872, Form 990, or Form 990-EZ. Free taxes online Employer identification number. Free taxes online   If your organization needs an EIN, you can apply for one: Online—Click on the Employer ID Numbers (EINs) link at www. Free taxes online IRS. Free taxes online gov/businesses/small. Free taxes online By telephone at 1-800-829-4933 from 7:00 a. Free taxes online m. Free taxes online to 10:00 p. Free taxes online m. Free taxes online in the organization's local time zone. Free taxes online By mailing or faxing Form SS-4. Free taxes online   If you previously applied for an EIN and have not yet received it, or you are unsure whether you have an EIN, please call our toll-free customer account services number, 1-877-829-5500, for assistance. Free taxes online Due dates. Free taxes online   The initial Form 8871 must be filed within 24 hours of the date on which the organization was established. Free taxes online If there is a material change, an amended Form 8871 must be filed within 30 days of the material change. Free taxes online When the organization terminates its existence, it must file a final Form 8871 within 30 days of termination. Free taxes online   If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file on the next business day. Free taxes online How to file. Free taxes online   An organization must file Form 8871 electronically via the IRS Internet website at www. Free taxes online IRS. Free taxes online gov/polorgs (Keyword: political orgs). Free taxes online Form 8453-X, Political Organization Declaration for Electronic Filing of Notice of Section 527 Status. Free taxes online   After electronically submitting Form 8871, the political organization must print, sign, and mail Form 8453-X to the IRS. Free taxes online Upon receipt of the Form 8453-X, the IRS will send the organization a username and password that must be used to file an amended or final Form 8871 or to electronically file Form 8872. Free taxes online Penalties Failure to file. Free taxes online   An organization that is required to file Form 8871, but fails to do so on a timely basis, will not be treated as a tax-exempt section 527 organization for any period before the date Form 8871 is filed. Free taxes online Also, the taxable income of the organization for that period will include its exempt function income (including contributions received, membership dues, and political fundraising receipts) minus any deductions directly connected with the production of that income. Free taxes online   Failure to file an amended Form 8871 will cause the organization not to be treated as a tax-exempt section 527 organization. Free taxes online If an organization is treated as not being a tax-exempt section 527 organization, the taxable income of the organization will be determined by considering any exempt function income and deductions during the period beginning on the date of the material change and ending on the date that the amended Form 8871 is filed. Free taxes online    The tax is computed by multiplying the organization's taxable income by the highest corporate tax rate. Free taxes online Fraudulent returns. Free taxes online   Any individual or corporation that willfully delivers or discloses to the IRS any list, return, account, statement or other document known to be fraudulent or false as to any material matter will be fined not more than $10,000 ($50,000 in the case of a corporation) or imprisoned for not more than 1 year or both. Free taxes online Waiver of penalties. Free taxes online   The IRS may waive any additional tax assessed on an organization for failure to file Form 8871 if the failure was due to reasonable cause and not willful neglect. Free taxes online Additional information. Free taxes online   For more information on Form 8871, see the form and its instructions. Free taxes online For a discussion on the public inspection requirements for the form, see Public Inspection of Exemption Applications, Annual Returns, and Political Organization Reporting Forms , later. Free taxes online Form 8872 Every tax-exempt section 527 political organization that accepts a contribution or makes an expenditure, for an exempt function during the calendar year, must file Form 8872 except: A political organization that is not required to file Form 8871 (discussed earlier). Free taxes online A political organization that is subject to tax on its income because it did not file or amend Form 8871. Free taxes online A qualified state or local political organization (QSLPO), discussed below. Free taxes online All other tax-exempt section 527 organizations that accept contributions or make expenditures for an exempt function are required to file Form 8872. Free taxes online Qualified state or local political organization. Free taxes online   A state or local political organization may be a QSLPO if: All of its political activities relate solely to state or local public office (or office in a state or local political organization). Free taxes online It is subject to a state law that requires it to report (and it does report) to a state agency information about contributions and expenditures that is similar to the information that the organization would otherwise be required to report to the IRS. Free taxes online The state agency and the organization make the reports publicly available. Free taxes online No federal candidate or office holder: Controls or materially participates in the direction of the organization, Solicits contributions for the organization, or Directs the disbursements of the organization. Free taxes online Information required on Form 8872. Free taxes online   If an organization pays an individual $500 or more for the calendar year, the organization is required to disclose the individual's name, address, occupation, employer, amount of the expense, the date the expense was paid, and the purpose of the expense on Form 8872. Free taxes online   If an organization receives contributions of $200 or more from one contributor for the calendar year, the organization must disclose the donor's name, address, occupation, employer, and the date the contributions were made. Free taxes online   For additional information that is required, see Form 8872. Free taxes online Due dates. Free taxes online   The due dates for filing Form 8872 vary depending on whether the form is due for a reporting period that occurs during a calendar year in which a regularly scheduled election is held, or any other calendar year (a nonelection year). Free taxes online   If the due date falls on a Saturday, Sunday, or legal holiday, the organization can file on the next business day. Free taxes online Election year filing. Free taxes online    In election years, Form 8872 must be filed on either a quarterly or a monthly basis. Free taxes online Both a pre-election report and a post-election report are also required to be filed in an election year. Free taxes online An election year is any year in which a regularly scheduled general election for federal office is held (an even-numbered year). Free taxes online Nonelection year filing. Free taxes online    In nonelection years, the form must be filed on a semiannual or monthly basis. Free taxes online A complete listing of these filing periods are in the Form 8872 Instructions. Free taxes online A nonelection year is any odd-numbered year. Free taxes online How to file. Free taxes online   Form 8872 can be filed either electronically or by mail. Free taxes online However, organizations that have, or expect to have, contributions or expenditures of $50,000 or more for the year must file electronically. Free taxes online    To file by mail, send Form 8872 to the:   Department of the Treasury Internal Revenue Service Center Ogden, UT 84201-0027 Electronic filing. Free taxes online   File electronically via the IRS internet website at www. Free taxes online IRS. Free taxes online gov/polorgs. Free taxes online You will need a user ID and password to electronically file Form 8872. Free taxes online Organizations that have completed the electronic filing of Form 8871 and submitted a completed and signed Form 8453-X will receive a username and password in the mail. Free taxes online   Organizations that have completed the electronic filing of Form 8871, but have not received their user ID and password can request one by writing to the following address: Internal Revenue Service Attn: Request for 8872 Password Mail Stop 6273 Ogden, UT 84201 Lost username and password. Free taxes online   If you have forgotten or misplaced the username and password issued to your organization after you filed your initial Form 8871, send a letter requesting a new username and password to the address under Electronic filing. Free taxes online You can also fax your request to (801) 620-3249. Free taxes online It may take 3-6 weeks for your new username and password to arrive, as they will be mailed to the organization. Free taxes online Penalty A penalty will be imposed if the organization is required to file Form 8872 and it: Fails to file the form by the due date, or Files the form but fails to report all of the information required or reports incorrect information. Free taxes online The penalty is 35% of the total amount of contributions and expenditures to which a failure relates. Free taxes online Fraudulent returns. Free taxes online   Any individual or corporation that willfully delivers or discloses any list, return, account, statement, or other document known to be fraudulent or false as to any material matter will be fined not more than $10,000 ($50,000 in the case of a corporation), or imprisoned for not more than 1 year, or both. Free taxes online Waiver of penalties. Free taxes online   The IRS may waive any additional tax assessed on an organization for failure to file Form 8872 if the failure was due to reasonable cause and not willful neglect. Free taxes online Donee Information Return Dispositions of donated property. Free taxes online   If an organization receives charitable deduction property and within three years sells, exchanges, or otherwise disposes of the property, the organization must file Form 8282, Donee Information Return. Free taxes online However, an organization is not required to file Form 8282 if: The property is valued at $500 or less, or The property is consumed or distributed for charitable purposes. Free taxes online   Form 8282 must be filed with the IRS within 125 days after the disposition. Free taxes online Additionally, a copy of Form 8282 must be given to the donor. Free taxes online If the organization fails to file the required information return, penalties may apply. Free taxes online Charitable deduction property. Free taxes online   This is any property (other than money or publicly traded securities) for which the donee organization signed an appraisal summary or Form 8283, Noncash Charitable Contributions. Free taxes online Publicly traded securities. Free taxes online   These are securities for which market quotations are readily available on an established securities market as of the date of the contribution. Free taxes online Appraisal summary. Free taxes online   If the value of the donated property exceeds $5,000, the donor must get a qualified appraisal for contributions of property, see the Exceptions. Free taxes online below. Free taxes online Exceptions. Free taxes online   A written appraisal is not needed if the property is: Nonpublicly traded stock of $10,000 or less, A vehicle (including a car, boat, or airplane), if your deduction for the vehicle is limited to the gross proceeds from its sale, Intellectual property, Certain securities considered to have market quotations readily available (see Regulations section 1. Free taxes online 170A-13(c)(7)(xi)(B)), Inventory and other property donated by a corporation that are qualified contributions for the care of the ill, the needy, or infants, within the meaning of section 170(e)(3)(A), or Any donation of stock in trade, inventory, or property held primarily for sale to customers in the ordinary course of your trade or business. Free taxes online   The donee organization is not a qualified appraiser for the purpose of valuing the donated property. Free taxes online For more information, get Publication 561, Determining the Value of Donated Property. Free taxes online Form 8283. Free taxes online   For noncash donations over $5,000, the donor must attach Form 8283 to the tax return to support the charitable deduction. Free taxes online The donee must sign Part IV of Section B, Form 8283 unless publicly traded securities are donated. Free taxes online The person who signs for the donee must be an official authorized to sign the donee's tax or information returns, or a person specifically authorized to sign by that official. Free taxes online The signature does not represent concurrence in the appraised value of the contributed property. Free taxes online A signed acknowledgment represents receipt of the property described on Form 8283 on the date specified on the form. Free taxes online The signature also indicates knowledge of the information reporting requirements on dispositions, as previously discussed. Free taxes online A copy of Form 8283 must be given to the donee. Free taxes online Information Provided to Donors In some situations, a donor must obtain certain information from a donee organization to obtain a deduction for a charitable contribution. Free taxes online In other situations, the donee organization is required to provide information to the donor. Free taxes online A charitable organization must give a donor a disclosure statement for a quid pro quo contribution over $75. Free taxes online (See Disclosure statement. Free taxes online later. Free taxes online ) This is a payment a donor makes to a charity partly as a contribution and partly for goods or services. Free taxes online See Quid pro quo contribution below for an example. Free taxes online Failure to make the required disclosure may result in a penalty to the organization. Free taxes online A donor cannot deduct a charitable contribution of $250 or more unless the donor has a written acknowledgment from the charitable organization. Free taxes online In certain circumstances, an organization may be able to meet both of these requirements with the same written document. Free taxes online Disclosure of Quid Pro Quo Contributions A charitable organization must provide a written disclosure statement to donors of a quid pro quo contribution over $75. Free taxes online Quid pro quo contribution. Free taxes online   A contribution made by a donor in exchange for goods or services is known as a quid pro quo contribution. Free taxes online Your charitable organization must provide the donor a written statement informing the donor of the fair market value of the items or services it provided in exchange for the contribution. Free taxes online Generally, a written statement is required for each payment, whenever the contribution portion is over $75. Free taxes online Example. Free taxes online If a donor gives your charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution. Free taxes online In this example, the charitable part of the payment is $60. Free taxes online Even though the deductible part of the payment is not more than $75, a written statement must be filed because the total payment is more than $75. Free taxes online If your organization fails to disclose quid pro quo contributions, the organization may be subject to a penalty. Free taxes online Disclosure statement. Free taxes online   The required written disclosure statement must: Inform the donor that the amount of the contribution that is deductible for federal income tax purposes is limited to the excess of any money (and the value of any property other than money) contributed by the donor over the fair market value of goods or services provided by the charity, and Provide the donor with a good faith estimate of the fair market value of the goods or services that the donor received. Free taxes online The charity must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. Free taxes online If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when it actually receives the contribution. Free taxes online   No disclosure statement is required if any of the following are true. Free taxes online The goods or services given to a donor have insubstantial value as described in Revenue Procedure 90-12, 1990-1 C. Free taxes online B. Free taxes online 471, Revenue Procedure 90-12, and Revenue Procedure 92-49, 1992-1 C. Free taxes online B. Free taxes online 507 (as adjusted for inflation), Revenue Procedure 92-49. Free taxes online There is no donative element involved in a particular transaction with a charity (for example, there is generally no donative element involved in a visitor's purchase from a museum gift shop). Free taxes online There is only an intangible religious benefit provided to the donor. Free taxes online The intangible religious benefit must be provided to the donor by an organization organized exclusively for religious purposes, and must be of a type that generally is not sold in a commercial transaction outside the donative context. Free taxes online For example, a donor who, for a payment, is granted admission to a religious ceremony for which there is no admission charge is provided an intangible religious benefit. Free taxes online A donor is not provided intangible religious benefits for payments made for tuition for education leading to a recognized degree, travel services, or consumer goods. Free taxes online The donor makes a payment of $75 or less per year and receives only annual membership benefits that consist of: Any rights or privileges (other than the right to purchase tickets for college athletic events) that the taxpayer can exercise often during the membership period, such as free or discounted admissions or parking or preferred access to goods or services, or Admission to events that are open only to members and the cost per person of which is within the limits for low-cost articles described in Revenue Procedure 90-12 (as adjusted for inflation), Revenue Procedure 90-12. Free taxes online Good faith estimate of fair market value (FMV). Free taxes online   An organization can use any reasonable method to estimate the FMV of goods or services it provided to a donor, as long as it applies the method in good faith. Free taxes online   The organization can estimate the FMV of goods or services that generally are not commercially available by using the FMV of similar or comparable goods or services. Free taxes online Goods or services may be similar or comparable even if they do not have the unique qualities of the goods or services being valued. Free taxes online Example 1. Free taxes online A charity provides a 1-hour tennis lesson with a tennis professional for the first $500 payment it receives. Free taxes online The tennis professional provides 1-hour lessons on a commercial basis for $100. Free taxes online A good faith estimate of the lesson's FMV is $100. Free taxes online Example 2. Free taxes online For a payment of $50,000, a museum allows a donor to hold a private event in a room of the museum. Free taxes online A good faith estimate of the FMV of the right to hold the event in the museum can be made by using the cost of renting a hotel ballroom with a capacity, amenities, and atmosphere comparable to the museum room, even though the hotel ballroom lacks the unique art displayed in the museum room. Free taxes online If the hotel ballroom rents for $2,500, a good faith estimate of the FMV of the right to hold the event in the museum is $2,500. Free taxes online Example 3. Free taxes online For a payment of $1,000, a charity provides an evening tour of a museum conducted by a well-known artist. Free taxes online The artist does not provide tours on a commercial basis. Free taxes online Tours of the museum normally are free to the public. Free taxes online A good faith estimate of the FMV of the evening museum tour is $0 even though it is conducted by the artist. Free taxes online Penalty for failure to disclose. Free taxes online   A penalty is imposed on a charity that does not make the required disclosure of a quid pro quo contribution of more than $75. Free taxes online The penalty is $10 per contribution, not to exceed $5,000 per fundraising event or mailing. Free taxes online The charity can avoid the penalty if it can show that the failure was due to reasonable cause. Free taxes online Acknowledgment of Charitable Contributions of $250 or More A donor can deduct a charitable contribution of $250 or more only if the donor has a written acknowledgment from the charitable organization. Free taxes online The donor must get the acknowledgment by the earlier of: The date the donor files the original return for the year the contribution is made, or The due date, including extensions, for filing the return. Free taxes online The donor is responsible for requesting and obtaining the written acknowledgment from the donee. Free taxes online A charitable organization that receives a payment made as a contribution is treated as the donee organization for this purpose even if the organization (according to the donor's instructions or otherwise) distributes the amount received to one or more charities. Free taxes online Quid pro quo contribution. Free taxes online   If the donee provides goods or services to the donor in exchange for the contribution (a quid pro quo contribution), the acknowledgment must include a good faith estimate of the value of the goods or services. Free taxes online See Disclosure of Quid Pro Quo Contributions earlier. Free taxes online Form of acknowledgment. Free taxes online   Although there is no prescribed format for the written acknowledgment, it must provide enough information to substantiate the amount of the contribution. Free taxes online For more information, see IRS Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements. Free taxes online Cash contributions. Free taxes online   To deduct a contribution of cash, a check, or other monetary gift (regardless of the amount), a donor must maintain a bank record or a written communication from the donee organization showing the donee's name, date, and amount of the contribution. Free taxes online In the case of a lump-sum contribution (rather than a contribution by payroll deduction) made through the Combined Federal Campaign or a similar program such as a United Way Campaign, the written communication must include the name of the donee organization that is the ultimate recipient of the charitable contribution. Free taxes online Contributions by payroll deduction. Free taxes online   An organization may substantiate an employee's contribution by deduction from its payroll by: A pay stub, Form W-2, or other document showing a contribution to a donee organization, together with A pledge card or other document from the donee organization that shows its name. Free taxes online   For contributions of $250 or more, the document must state that the donee organization provides no goods or services for any payroll contributions. Free taxes online The amount withheld from each payment of wages to a taxpayer is treated as a separate contribution. Free taxes online Acknowledgment of Vehicle Contribution If an exempt organization receives a contribution of a qualified vehicle with a claimed value of more than $500, the donee organization is required to provide a contemporaneous written acknowledgment to the donor. Free taxes online The donee organization can use a completed Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, for the contemporaneous written acknowledgment. Free taxes online See section 3. Free taxes online 03 of Notice 2005-44 for guidance on the information that must be included in a contemporaneous written acknowledgment and the deadline for furnishing the acknowledgment to the donor. Free taxes online Any donee organization that provides a contemporaneous written acknowledgment to a donor is required to report to the IRS the information contained in the acknowledgment. Free taxes online The report is due by February 28 (March 31 if filing electronically) of the year following the year in which the donee organization provides the acknowledgment to the donor. Free taxes online The organization must file the report on Copy A of Form 1098-C. Free taxes online An organization that files Form 1098-C on paper should send it with Form 1096, Annual Summary and Transmittal of U. Free taxes online S. Free taxes online Information Returns. Free taxes online See the Instructions for Form 1096 for the correct filing location. Free taxes online An organization that is required to file 250 or more Forms 1098-C during the calendar year must file the forms electronically or magnetically. Free taxes online Specifications for filing Form 1098-C electronically or magnetically can be found in Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically at www. Free taxes online IRS. Free taxes online gov/pub/irs-pdf/p1220. Free taxes online pdf. Free taxes online Acknowledgment For a contribution of a qualified vehicle with a claimed value of $500 or less, do not file Form 1098-C. Free taxes online However, you can use it as the contemporaneous written acknowledgment under section 170(f)(8) by providing the donor with Copy C only. Free taxes online See the Instructions for Form 1098-C. Free taxes online Generally, the organization should complete Form 1098-C as the written acknowledgment to the donor and the IRS. Free taxes online The contents of the acknowledgment depend upon whether the organization: Sells a qualified vehicle without any significant intervening use or material improvement, Intends to make a significant intervening use of or material improvement to a qualified vehicle prior to sale, or Sells a qualified vehicle to a needy individual at a price significantly below fair market value, or a gratuitous transfer to a needy individual in direct furtherance of a charitable purpose of the organization of relieving the poor and distressed or the underprivileged who are in need of a means of transportation. Free taxes online For more information on the acknowledgment, see Notice 2005-44, 2005-25 I. Free taxes online R. Free taxes online B. Free taxes online 1287, at www. Free taxes online irs. Free taxes online gov/irb/2005-25_IRB/2005-25_IRB/ar09. Free taxes online html. Free taxes online Material improvements or significant intervening use. Free taxes online   To constitute significant intervening use, the organization must actually use the vehicle to substantially further the organization's regularly conducted activities, and the use must be significant, not incidental. Free taxes online Factors in determining whether a use is a significant intervening use depend on the nature, extent, frequency, and duration. Free taxes online For this purpose, use includes providing transportation on a regular basis for a significant period of time or significant use directly related to training in vehicle repair. Free taxes online Use does not include the use of a vehicle to provide training in business skills, such as marketing or sales. Free taxes online Examples of significant use include: Driving a vehicle every day for 1 year to deliver meals to needy individuals, if delivering meals is an activity regularly conducted by the organization. Free taxes online Driving a vehicle for 10,000 miles over a 1-year period to deliver meals to needy individuals, if delivering meals is an activity regularly conducted by the organization. Free taxes online   Material improvements include major repairs and additions that improve the condition of the vehicle in a manner that significantly increases the value. Free taxes online To be a material improvement, the improvement cannot be funded by an additional payment to the organization from the donor of the vehicle. Free taxes online Material improvements do not include cleaning, minor repairs, routine maintenance, painting, removal of dents or scratches, cleaning or repair of upholstery, and installation of theft deterrent devices. Free taxes online Penalties. Free taxes online   If your charitable organization receives contributions of used motor vehicles, boats, and airplanes valued over $500 it may be subject to a penalty if it knowingly: Fails to furnish an acknowledgement in a timely manner, showing the required information, or Furnishes a false or fraudulent acknowledgement of the contribution. Free taxes online    Other penalties may apply. Free taxes online See Part O in the 2012 General Instructions for Certain Information Returns. Free taxes online   An acknowledgment containing a certification will be presumed to be false or fraudulent if the qualified vehicle is sold to a buyer other than a needy individual without a significant intervening use or material improvement within 6 months of the date of the contribution. Free taxes online   If a charity sells a donated vehicle at auction, the IRS will not accept as substantiation an acknowledgment from the charity stating that the vehicle is to be transferred to a needy individual for significantly below fair market value. Free taxes online Vehicles sold at auction are not sold at prices significantly below fair market value, and the IRS will not treat vehicles sold at auction as qualifying for this exception. Free taxes online   The penalty for a false or fraudulent acknowledgment where the donee certifies that the vehicle will not be transferred for money, other property, or services before completion of material improvements or significant intervening use or the donee certifies that the vehicle is to be transferred to a needy individual for significantly below fair market value in furtherance of the donee's charitable purpose is the larger of $5,000 or the claimed value of the vehicle multiplied by 39. Free taxes online 6%. Free taxes online   The penalty for an acknowledgment relating to a qualified vehicle being sold in an arm's length transaction to an unrelated party is the larger of the gross proceeds from the sale or the sales price stated in the acknowledgment multiplied by 39. Free taxes online 6%. Free taxes online Qualified Intellectual Property A taxpayer who contributes qualified intellectual property to a charity may be entitled to a charitable deduction, in addition to any initial deduction allowed in the year of contribution. Free taxes online The additional deduction is based on a specified percentage of the qualified donee income with respect to the qualified intellectual property. Free taxes online To qualify for the additional charitable deduction, the donor must provide notice to the donee at the time of the contribution that the donor intends to treat the contribution as qualified intellectual property contribution for purposes of sections 170(m) and 6050L. Free taxes online Every donee organization described in section 170(c) (except a private foundation as defined in section 509(a) that is not described in section 170(b)(1)(F)) that receives or accrues net income from a charitable gift of qualified intellectual property must file Form 8899. Free taxes online Form 8899. Free taxes online   Form 8899, Notice of Income From Donated Intellectual Property, is used by a donee to report net income from qualified intellectual property to the donor of the property and to the IRS and is due by the last day of the first full month following the close of the donee’s tax year. Free taxes online This form must be filed for each tax year of the donee in which the donated property produces net income, but only if all or part of that tax year occurs during the 10-year period beginning on the date of the contribution and that tax year does not begin after the expiration of the legal life of the donated property. Free taxes online Qualified donee income. Free taxes online   Qualified donee income is any net income received by or accrued to the donee that is properly allocable to the qualified intellectual property for the tax year of the donee which ends within or with the tax year of the donor. Free taxes online Income is not treated as allocated to qualified intellectual property if it is received or accrued after the earlier of the expiration of the legal life of the qualified intellectual property, or the 10-year period beginning with the date of