IRS Publication 557: So, You Wanna be Tax-Exempt?

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Is your organization somehow helping the Greater Good and you feel it deserves to be tax-exempt?  Use IRS Publication 557 to apply for recognition by the IRS of tax-exempt status.  Here’s how to determine if your organization qualifies to be exempt from paying federal income taxes.  Listed below are the main categories of tax-exempt organizations according to Pub 557.  Find yours and read on.

1.  Charitable Organizations

This is the most obvious type of tax-exempt organization.  Let’s say you form a group that take old suits, revamps them and sells them at super-cheap prices to poor people who need them for work or looking for work.  The money you make goes towards paying staff and the rest goes back into the business…upkeep, building rent, etc.  Any extra and it pays for seminars held at your office, for career-minded people to gain skills.  Totally non-profit and a fine example of an organization that would qualify for tax-exempt status according to IRS Publication 557.  It’s a charitable organization.

2.  Education Organizations

OK now you form an organization and the main goal is to get the word out about nutrition so we don’t have so many obese people in our country.  You hold seminars, do one-on-one counseling with anyone who’d like to re-do their diet plan, and even rent your space out to the local chapter of Weight Watchers.  Your purpose is to educate the public on  nutrition.  Get out Pub 557 and start applying for tax-exempt status because you qualify.

3.  Literary Organizations

You have a book club that’s gone viral…people are lining up to get in, and you have a reputation for recommending the most fabulous books.  You also have an agenda…to promote the works of female authors.  You organization is called Femme Fiction, and you promote only female authors.  You get paid to go to schools and talk about great books that happen to be written by women.  You can see about applying for tax-exempt status because you may qualify.

4.  Scientific Organizations

You have a lab and your sole purpose is to find a cure for skin cancer.  You need donations, and all your profits go toward the research.  Tax-exempt status for you, just read IRS Publication 557 very closely and submit all the required documents as outlined in the publication.

5.  Protecting Animals and Children

Lots of work to be done in these areas, of course.  Pub 557 tells you exactly how to become tax-exempt if your organization fits into this category.

6.  Public Safety

Formed a corporation that takes on local governments who don’t build pedestrian and bicycle laws into code?  Well you can also apply to become tax-exempt.  If you’ve got public safety in mind, from clean water to safer highways, you may fit the bill.