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Turbotax 2012

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Turbotax 2012

Turbotax 2012 3. Turbotax 2012   Section 501(c)(3) Organizations Table of Contents IntroductionChild care organizations. Turbotax 2012 Topics - This chapter discusses: Useful Items - You may want to see: Contributions to 501(c)(3) OrganizationsCertain annuity contracts. Turbotax 2012 Certain contracts held by a charitable remainder trust. Turbotax 2012 Excise Taxes. Turbotax 2012 Indoor tanning services. Turbotax 2012 Application for Recognition of ExemptionPolitical activity. Turbotax 2012 Private delivery service. Turbotax 2012 Amendments to organizing documents required. Turbotax 2012 How to show reasonable action and good faith. Turbotax 2012 Not acting reasonably and in good faith. Turbotax 2012 Prejudicing the interest of the Government. Turbotax 2012 Procedure for requesting extension. Turbotax 2012 More information. Turbotax 2012 Organizations Not Required To File Form 1023 Articles of OrganizationOrganizational Test Dedication and Distribution of Assets Educational Organizations and Private SchoolsEducational Organizations Private Schools Organizations Providing InsuranceCharitable Risk Pools Other Section 501(c)(3) OrganizationsCharitable Organizations Religious Organizations Scientific Organizations Literary Organizations Amateur Athletic Organizations Prevention of Cruelty to Children or Animals Private Foundations and Public CharitiesPrivate Foundations Public Charities Private Operating Foundations Lobbying ExpendituresLobbying expenditures. Turbotax 2012 Grass roots expenditures. Turbotax 2012 Lobbying nontaxable amount. Turbotax 2012 Grass roots nontaxable amount. Turbotax 2012 Organization that no longer qualifies. Turbotax 2012 Tax on organization. Turbotax 2012 Tax on managers. Turbotax 2012 Taxes on organizations. Turbotax 2012 Taxes on managers. Turbotax 2012 Political expenditures. Turbotax 2012 Correction of expenditure. Turbotax 2012 Introduction An organization may qualify for exemption from federal income tax if it is organized and operated exclusively for one or more of the following purposes. Turbotax 2012 Religious. Turbotax 2012 Charitable. Turbotax 2012 Scientific. Turbotax 2012 Testing for public safety. Turbotax 2012 Literary. Turbotax 2012 Educational. Turbotax 2012 Fostering national or international amateur sports competition (but only if none of its activities involve providing athletic facilities or equipment; however, see Amateur Athletic Organizations , later in this chapter). Turbotax 2012 The prevention of cruelty to children or animals. Turbotax 2012 To qualify, the organization must be a corporation, community chest, fund, articles of association, or foundation. Turbotax 2012 A trust is a fund or foundation and will qualify. Turbotax 2012 However, an individual or a partnership will not qualify. Turbotax 2012 Examples. Turbotax 2012   Qualifying organizations include: Nonprofit old-age homes, Parent-teacher associations, Charitable hospitals or other charitable organizations, Alumni associations, Schools, Chapters of the Red Cross, Boys' or Girls' Clubs, and Churches. Turbotax 2012 Child care organizations. Turbotax 2012   The term educational purposes includes providing for care of children away from their homes if substantially all the care provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. Turbotax 2012 Instrumentalities. Turbotax 2012   A state or municipal instrumentality may qualify under section 501(c)(3) if it is organized as a separate entity from the governmental unit that created it and if it otherwise meets the organizational and operational tests of section 501(c)(3). Turbotax 2012 Examples of a qualifying instrumentality might include state schools, universities, or hospitals. Turbotax 2012 However, if an organization is an integral part of the local government or possesses governmental powers, it does not qualify for exemption. Turbotax 2012 A state or municipality itself does not qualify for exemption. Turbotax 2012 Topics - This chapter discusses: Contributions to 501(c)(3) organizations, Applications for recognition of exemption, Articles of Organization, Educational organizations and private schools, Organizations providing insurance, Other section 501(c)(3) organizations, Private foundations and public charities, and Lobbying expenditures. Turbotax 2012 Useful Items - You may want to see: Forms (and Instructions) 1023 Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code See chapter 6 for information about getting publications and forms. Turbotax 2012 Contributions to 501(c)(3) Organizations Contributions to domestic organizations described in this chapter, except organizations testing for public safety, are deductible as charitable contributions on the donor's federal income tax return. Turbotax 2012 Fundraising events. Turbotax 2012   If the donor receives something of value in return for the contribution, a common occurrence with fundraising efforts, part or all of the contribution may not be deductible. Turbotax 2012 This may apply to fundraising activities such as charity balls, bazaars, banquets, auctions, concerts, athletic events, and solicitations for membership or contributions when merchandise or benefits are given in return for payment of a specified minimum contribution. Turbotax 2012   If the donor receives or expects to receive goods or services in return for a contribution to your organization, the donor cannot deduct any part of the contribution unless the donor intends to, and does, make a payment greater than the fair market value of the goods or services. Turbotax 2012 If a deduction is allowed, the donor can deduct only the part of the contribution, if any, that is more than the fair market value of the goods or services received. Turbotax 2012 You should determine in advance the fair market value of any goods or services to be given to contributors and tell them, when you publicize the fundraising event or solicit their contributions, how much is deductible and how much is for the goods or services. Turbotax 2012 See Disclosure of Quid Pro Quo Contributions in chapter 2. Turbotax 2012 Exemption application not filed. Turbotax 2012   Donors cannot deduct any charitable contribution to an organization that is required to apply for recognition of exemption but has not done so. Turbotax 2012 Separate fund—contributions that are deductible. Turbotax 2012   An organization that is exempt from federal income tax other than as an organization described in section 501(c)(3) can, if it desires, establish a fund, separate and apart from its other funds, exclusively for religious, charitable, scientific, literary, or educational purposes, fostering national or international amateur sports competition, or for the prevention of cruelty to children or animals. Turbotax 2012   If the fund is organized and operated exclusively for these purposes, it may qualify for exemption as an organization described in section 501(c)(3), and contributions made to it will be deductible as provided by section 170. Turbotax 2012 A fund with these characteristics must be organized in such a manner as to prohibit the use of its funds upon dissolution, or otherwise, for the general purposes of the organization creating it. Turbotax 2012 Personal benefit contracts. Turbotax 2012   Generally, charitable deductions will not be allowed for a transfer to, or for the use of, a section 501(c)(3) or (c)(4) organization if in connection with the transfer: The organization directly or indirectly pays, or previously paid, a premium on a personal benefit contract for the transferor, or There is an understanding or expectation that anyone will directly or indirectly pay a premium on a personal benefit contract for the transferor. Turbotax 2012   A personal benefit contract with respect to the transferor is any life insurance, annuity, or endowment contract, if any direct or indirect beneficiary under the contract is the transferor, any member of the transferor's family, or any other person designated by the transferor. Turbotax 2012 Certain annuity contracts. Turbotax 2012   If an organization incurs an obligation to pay a charitable gift annuity, and the organization purchases an annuity contract to fund the obligation, individuals receiving payments under the charitable gift annuity will not be treated as indirect beneficiaries if the organization owns all of the incidents of ownership under the contract, is entitled to all payments under the contract, and the timing and amount of the payments are substantially the same as the timing and amount of payments to each person under the obligation (as such obligation is in effect at the time of the transfer). Turbotax 2012 Certain contracts held by a charitable remainder trust. Turbotax 2012   An individual will not be considered an indirect beneficiary under a life insurance, annuity, or endowment contract held by a charitable remainder annuity trust or a charitable remainder unitrust solely by reason of being entitled to the payment if the trust owns all of the incidents of ownership under the contract, and the trust is entitled to all payments under the contract. Turbotax 2012 Excise tax. Turbotax 2012   If the premiums are paid in connection with a transfer for which a deduction is not allowable under the deduction denial rule, without regard to when the transfer to the charitable organization was made, an excise tax will be applied that is equal to the amount of the premiums paid by the organization on any life insurance, annuity, or endowment contract. Turbotax 2012 The excise tax does not apply if all of the direct and indirect beneficiaries under the contract are organizations. Turbotax 2012 Excise Taxes. Turbotax 2012   A charitable organization liable for excise taxes must file Form 4720, Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code. Turbotax 2012 Generally, the due date for filing Form 4720 occurs on the fifteenth day of the fifth month following the close of the organization's tax year. Turbotax 2012 Indoor tanning services. Turbotax 2012   If your organization provides an indoor tanning bed service, the ACA imposed a 10% excise tax on services provided after June 30, 2010. Turbotax 2012 For more information, go to IRS. Turbotax 2012 gov and select Affordable Care Act Tax Provisions. Turbotax 2012 Application for Recognition of Exemption This discussion describes certain information to be provided upon application for recognition of exemption by all organizations created for any of the purposes described earlier in this chapter. Turbotax 2012 For example, the application must include a conformed copy of the organization's articles of incorporation, as discussed under Articles of Organization , later in this chapter. Turbotax 2012 See the organization headings that follow for specific information your organization may need to provide. Turbotax 2012 Form 1023. Turbotax 2012   Your organization must file its application for recognition of exemption on Form 1023. Turbotax 2012 See chapter 1 and the instructions accompanying Form 1023 for the procedures to follow in applying. Turbotax 2012 Some organizations are not required to file Form 1023. Turbotax 2012 See Organizations Not Required To File Form 1023, later. Turbotax 2012    Additional information to help you complete your application can be found online. Turbotax 2012 Go to Exemption Requirement – Section 501(c)(3) Organizations and select the link at the bottom of the Web page for step by step help with the application process. Turbotax 2012 See Exemption Requirements - Section 501(c)(3) Organizations. Turbotax 2012   Form 1023 and accompanying statements must show that all of the following are true. Turbotax 2012 The organization is organized exclusively for, and will be operated exclusively for, one or more of the purposes (religious, charitable, etc. Turbotax 2012 ) specified in the introduction to this chapter. Turbotax 2012 No part of the organization's net earnings will inure to the benefit of private shareholders or individuals. Turbotax 2012 You must establish that your organization will not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. Turbotax 2012 The organization will not, as a substantial part of its activities, attempt to influence legislation (unless it elects to come under the provisions allowing certain lobbying expenditures) or participate to any extent in a political campaign for or against any candidate for public office. Turbotax 2012 See Political activity, next, and Lobbying Expenditures , near the end of this chapter. Turbotax 2012 Political activity. Turbotax 2012   If any of the activities (whether or not substantial) of your organization consist of participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for public office, your organization will not qualify for tax-exempt status under section 501(c)(3). Turbotax 2012 Such participation or intervention includes the publishing or distributing of statements. Turbotax 2012   Whether your organization is participating or intervening, directly or indirectly, in any political campaign on behalf of (or in opposition to) any candidate for public office depends upon all of the facts and circumstances of each case. Turbotax 2012 Certain voter education activities or public forums conducted in a nonpartisan manner may not be prohibited political activity under section 501(c)(3), while other so-called voter education activities may be prohibited. Turbotax 2012 Effective date of exemption. Turbotax 2012   Most organizations described in this chapter that were organized after October 9, 1969, will not be treated as tax exempt unless they apply for recognition of exemption by filing Form 1023. Turbotax 2012 These organizations will not be treated as tax exempt for any period before they file Form 1023, unless they file the form within 27 months from the end of the month in which they were organized. Turbotax 2012 If the organization files the application within this 27-month period, the organization's exemption will be recognized retroactively to the date it was organized. Turbotax 2012 Otherwise, exemption will be recognized only from the date of receipt. Turbotax 2012 The date of receipt is the date of the U. Turbotax 2012 S. Turbotax 2012 postmark on the cover in which an exemption application is mailed or, if no postmark appears on the cover, the date the application is stamped as received by the IRS. Turbotax 2012 Private delivery service. Turbotax 2012   If a private delivery service designated by the IRS, rather than the U. Turbotax 2012 S. Turbotax 2012 Postal Service, is used to deliver the application, the date of receipt is the date recorded or marked by the private delivery service. Turbotax 2012 The following private delivery services have been designated by the IRS. Turbotax 2012 DHL Express (DHL): DHL “Same Day” Service. Turbotax 2012 Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. Turbotax 2012 United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Turbotax 2012 M. Turbotax 2012 , UPS Worldwide Express Plus, and UPS Worldwide Express. Turbotax 2012 Amendments to organizing documents required. Turbotax 2012   If an organization is required to alter its activities or to make substantive amendments to its organizing document, the ruling or determination letter recognizing its exempt status will be effective as of the date the changes are made. Turbotax 2012 If only a nonsubstantive amendment is made, exempt status will be effective as of the date it was organized, if the application was filed within the 15-month period, or the date the application was filed. Turbotax 2012 Extensions of time for filing. Turbotax 2012   There are two ways organizations seeking exemption can receive an extension of time for filing Form 1023. Turbotax 2012 Automatic 12-month extension. Turbotax 2012 Organizations will receive an automatic 12-month extension if they file an application for recognition of exemption with the IRS within 12 months of the original deadline. Turbotax 2012 To get this extension, an organization must add the following statement at the top of its application: “Filed Pursuant to Section 301. Turbotax 2012 9100-2. Turbotax 2012 ” Discretionary extensions. Turbotax 2012 An organization that fails to file a Form 1023 within the extended 12-month period will be granted an extension to file if it submits evidence (including affidavits) to establish that: It acted reasonably and in good faith, and Granting a discretionary extension will not prejudice the interests of the government. Turbotax 2012 How to show reasonable action and good faith. Turbotax 2012   An organization acted reasonably and showed good faith if at least one of the following is true. Turbotax 2012 The organization requests relief before its failure to file is discovered by the IRS. Turbotax 2012 The organization failed to file because of intervening events beyond its control. Turbotax 2012 The organization exercised reasonable diligence (taking into account the complexity of the return or issue and the organization's experience in these matters) but was not aware of the filing requirement. Turbotax 2012 The organization reasonably relied upon the written advice of the IRS. Turbotax 2012 The organization reasonably relied upon the advice of a qualified tax professional who failed to file or advise the organization to file Form 1023. Turbotax 2012 An organization cannot rely on the advice of a tax professional if it knows or should know that he or she is not competent to render advice on filing exemption applications or is not aware of all the relevant facts. Turbotax 2012 Not acting reasonably and in good faith. Turbotax 2012   An organization has not acted reasonably and in good faith under the following circumstances. Turbotax 2012 It seeks to change a return position for which an accuracy-related penalty has been or could be imposed at the time the relief is requested. Turbotax 2012 It was informed of the requirement to file and related tax consequences, but chose not to file. Turbotax 2012 It uses hindsight in requesting relief. Turbotax 2012 The IRS will not ordinarily grant an extension if specific facts have changed since the due date that makes filing an application advantageous to an organization. Turbotax 2012 Prejudicing the interest of the Government. Turbotax 2012   Prejudice to the interest of the Government results if granting an extension of time to file to an organization results in a lower total tax liability for the years to which the filing applies than would have been the case if the organization had filed on time. Turbotax 2012 Before granting an extension, the IRS can require the organization requesting it to submit a statement from an independent auditor certifying that no prejudice will result if the extension is granted. Turbotax 2012 The interests of the Government are ordinarily prejudiced if the tax year in which the application should have been filed (or any tax year that would have been affected had the filing been timely) are closed by the statute of limitations before relief is granted. Turbotax 2012 The IRS can condition a grant of relief on the organization providing the IRS with a statement from an independent auditor certifying that the interests of the Government are not prejudiced. Turbotax 2012 Procedure for requesting extension. Turbotax 2012   To request a discretionary extension, an organization must submit (to the IRS address shown on Form 1023 and Notice 1382) the following. Turbotax 2012 A statement showing the date Form 1023 was required to have been filed and the date it was actually filed. Turbotax 2012 Any documents relevant to the application. Turbotax 2012 An affidavit describing in detail the events that led to the failure to apply and to the discovery of that failure. Turbotax 2012 If the organization relied on a tax professional's advice, the affidavit must describe the engagement and responsibilities of the professional and the extent to which the organization relied on him or her. Turbotax 2012 This affidavit must be accompanied by a dated declaration, signed by an individual who has personal knowledge of the facts and circumstances, who is authorized to act for the organization, which states, “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. Turbotax 2012 ” Detailed affidavits from individuals having knowledge or information about the events that led to the failure to make the application and to the discovery of that failure. Turbotax 2012 This includes the organization's return preparer, and any accountant or attorney, knowledgeable in tax matters, who advised the taxpayer on the application. Turbotax 2012 The affidavits must describe the engagement and responsibilities of the individual and the advice that he or she provided. Turbotax 2012 These affidavits must include the name, current address, and taxpayer identification number of the individual, and be accompanied by a dated declaration, signed by the individual, which states: “Under penalties of perjury, I declare that I have examined this request, including accompanying documents, and, to the best of my knowledge and belief, the request contains all the relevant facts relating to the request, and such facts are true, correct, and complete. Turbotax 2012 ” The organization must state whether the returns for the tax year in which the application should have been filed or any tax years that would have been affected by the application had it been timely made are being examined by the IRS, an appeals office, or a federal court. Turbotax 2012 The organization must notify the IRS office considering the request for relief if the IRS starts an examination of any such return while the organization's request for relief is pending. Turbotax 2012 The organization, if requested, has to submit copies of its tax returns, and copies of the returns of other affected taxpayers. Turbotax 2012   A request for this relief in connection with an application for exemption does not require payment of an additional user fee. Turbotax 2012 Also, a request for relief under the automatic 12-month extension does not require payment of a user fee. Turbotax 2012 More information. Turbotax 2012   For more information about these procedures, see Regulations sections 301. Turbotax 2012 9100-1, 301. Turbotax 2012 9100-2, 301. Turbotax 2012 9100-3, Revenue Procedure 2013-4, section 6. Turbotax 2012 04, 2013-1 I. Turbotax 2012 R. Turbotax 2012 B. Turbotax 2012 126, and Revenue Procedure 2013-8, 2013-1 I. Turbotax 2012 R. Turbotax 2012 B. Turbotax 2012 237. Turbotax 2012 See Revenue Procedure 2013-4 and Revenue Procedure 2013-8. Turbotax 2012 Notification from the IRS. Turbotax 2012   Organizations filing Form 1023 and satisfying all requirements of section 501(c)(3) will be notified of their exempt status in writing. Turbotax 2012 Organizations Not Required To File Form 1023 Some organizations are not required to file Form 1023. Turbotax 2012 These include: Churches, interchurch organizations of local units of a church, conventions or associations of churches, or integrated auxiliaries of a church, such as a men's or women's organization, religious school, mission society, or youth group. Turbotax 2012 Any organization (other than a private foundation) normally having annual gross receipts of not more than $5,000 (see Gross receipts test, later). Turbotax 2012 These organizations are exempt automatically if they meet the requirements of section 501(c)(3). Turbotax 2012 Filing Form 1023 to establish exemption. Turbotax 2012   If the organization wants to establish its exemption with the IRS and receive a ruling or determination letter recognizing its exempt status, it should file Form 1023. Turbotax 2012 By establishing its exemption, potential contributors are assured by the IRS that contributions will be deductible. Turbotax 2012 A subordinate organization (other than a private foundation) covered by a group exemption letter does not have to submit a Form 1023 for itself. Turbotax 2012 Private foundations. Turbotax 2012   See Private Foundations and Public Charities, later in this chapter, for more information about the additional notice required from an organization in order for it not to be presumed to be a private foundation and for the additional information required from a private foundation claiming to be an operating foundation. Turbotax 2012 Gross receipts test. Turbotax 2012   For purposes of the gross receipts test, an organization normally does not have more than $5,000 annually in gross receipts if: During its first tax year the organization received gross receipts of $7,500 or less, During its first 2 years the organization had a total of $12,000 or less in gross receipts, and In the case of an organization that has been in existence for at least 3 years, the total gross receipts received by the organization during the immediately preceding 2 years, plus the current year, are $15,000 or less. Turbotax 2012   An organization with gross receipts more than the amounts in the gross receipts test, unless otherwise exempt from filing Form 1023, must file a Form 1023 within 90 days after the end of the period in which the amounts are exceeded. Turbotax 2012 For example, an organization's gross receipts for its first tax year were less than $7,500, but at the end of its second tax year its gross receipts for the 2-year period were more than $12,000. Turbotax 2012 The organization must file Form 1023 within 90 days after the end of its second tax year. Turbotax 2012   If the organization had existed for at least 3 tax years and had met the gross receipts test for all prior tax years but fails to meet the requirement for the current tax year, its tax-exempt status for the prior years will not be lost even if Form 1023 is not filed within 90 days after the close of the current tax year. Turbotax 2012 However, the organization will not be treated as a section 501(c)(3) organization for the period beginning with the current tax year and ending with the filing of Form 1023. Turbotax 2012 Example. Turbotax 2012   An organization is organized and operated exclusively for charitable purposes and is not a private foundation. Turbotax 2012 It was incorporated on January 1, 2009, and files returns on a calendar-year basis. Turbotax 2012 It did not file a Form 1023. Turbotax 2012 The organization's gross receipts during the years 2009 through 2012 were as follows: 2009 $3,600 2010 2,900 2011 400 2012 12,600   The organization's total gross receipts for 2009, 2010, and 2011 were $6,900. Turbotax 2012 Therefore, it did not have to file Form 1023 and is exempt for those years. Turbotax 2012 However, for 2010, 2011, and 2012 the total gross receipts were $15,900. Turbotax 2012 Therefore, the organization must file Form 1023 within 90 days after the end of its 2012 tax year. Turbotax 2012 If it does not file within this time period, it will not be exempt under section 501(c)(3) for the period beginning with tax year 2012 ending when the Form 1023 is received by the IRS. Turbotax 2012 The organization, however, will not lose its exempt status for the tax years ending before January 1, 2012. Turbotax 2012   The IRS will consider applying the Commissioner's discretionary authority to extend the time for filing Form 1023. Turbotax 2012 See the procedures for this extension discussed earlier. Turbotax 2012 Articles of Organization Your organization must include a conformed copy of its articles of organization with the application for recognition of exemption. Turbotax 2012 This may be its trust instrument, corporate charter, articles of association, or any other written instrument by which it is created. Turbotax 2012 Organizational Test The articles of organization must limit the organization's purposes to one or more of those described at the beginning of this chapter and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further one or more of those purposes. Turbotax 2012 These conditions for exemption are referred to as the organizational test. Turbotax 2012 Section 501(c)(3) is the provision of law that grants exemption to the organizations described in this chapter. Turbotax 2012 Therefore, the organizational test may be met if the purposes stated in the articles of organization are limited in some way by reference to section 501(c)(3). Turbotax 2012 The requirement that your organization's purposes and powers must be limited by the articles of organization is not satisfied if the limit is contained only in the bylaws or other rules or regulations. Turbotax 2012 Moreover, the organizational test is not satisfied by statements of your organization's officers that you intend to operate only for exempt purposes. Turbotax 2012 Also, the test is not satisfied by the fact that your actual operations are for exempt purposes. Turbotax 2012 In interpreting an organization's articles, the law of the state where the organization was created is controlling. Turbotax 2012 If an organization contends that the terms of its articles have a different meaning under state law than their generally accepted meaning, such meaning must be established by a clear and convincing reference to relevant court decisions, opinions of the state attorney general, or other appropriate state authorities. Turbotax 2012 The following are examples illustrating the organizational test. Turbotax 2012 Example 1. Turbotax 2012 Articles of organization state that an organization is formed exclusively for literary and scientific purposes within the meaning of section 501(c)(3). Turbotax 2012 These articles appropriately limit the organization's purposes. Turbotax 2012 The organization meets the organizational test. Turbotax 2012 Example 2. Turbotax 2012 An organization, by the terms of its articles, is formed to engage in research without any further description or limitation. Turbotax 2012 The organization will not be properly limited as to its purposes since all research is not scientific. Turbotax 2012 The organization does not meet the organizational test. Turbotax 2012 Example 3. Turbotax 2012 An organization's articles state that its purpose is to receive contributions and pay them over to organizations that are described in section 501(c)(3) and exempt from taxation under section 501(a). Turbotax 2012 The organization meets the organizational test. Turbotax 2012 Example 4. Turbotax 2012 If a stated purpose in the articles is the conduct of a school of adult education and its manner of operation is described in detail, such a purpose will be satisfactorily limited. Turbotax 2012 Example 5. Turbotax 2012 If the articles state the organization is formed for charitable purposes, without any further description, such language ordinarily will be sufficient since the term charitable has a generally accepted legal meaning. Turbotax 2012 On the other hand, if the purposes are stated to be charitable, philanthropic, and benevolent, the organizational requirement will not be met since the terms philanthropic and benevolent have no generally accepted legal meaning and, therefore, the stated purposes may, under the laws of the state, permit activities that are broader than those intended by the exemption law. Turbotax 2012 Example 6. Turbotax 2012 If the articles state an organization is formed to promote American ideals, or to foster the best interests of the people, or to further the common welfare and well-being of the community, without any limitation or provision restricting such purposes to accomplishment only in a charitable manner, the purposes will not be sufficiently limited. Turbotax 2012 Such purposes are vague and may be accomplished other than in an exempt manner. Turbotax 2012 Example 7. Turbotax 2012 A stated purpose to operate a hospital does not meet the organizational test since it is not necessarily charitable. Turbotax 2012 A hospital may or may not be exempt depending on the manner in which it is operated. Turbotax 2012 Example 8. Turbotax 2012 An organization that is expressly empowered by its articles to carry on social activities will not be sufficiently limited as to its power, even if its articles state that it is organized and will be operated exclusively for charitable purposes. Turbotax 2012 Dedication and Distribution of Assets Assets of an organization must be permanently dedicated to an exempt purpose. Turbotax 2012 This means that should an organization dissolve, its assets must be distributed for an exempt purpose described in this chapter, or to the Federal Government or to a state or local government for a public purpose. Turbotax 2012 If the assets could be distributed to members or private individuals or for any other purpose, the organizational test is not met. Turbotax 2012 Dedication. Turbotax 2012   To establish that your organization's assets will be permanently dedicated to an exempt purpose, the articles of organization should contain a provision ensuring their distribution for an exempt purpose in the event of dissolution. Turbotax 2012 Although reliance can be placed upon state law to establish permanent dedication of assets for exempt purposes, your organization's application probably can be processed much more rapidly if its articles of organization include a provision ensuring permanent dedication of assets for exempt purposes. Turbotax 2012 Distribution. Turbotax 2012   Revenue Procedure 82-2, 1982-1 C. Turbotax 2012 B. Turbotax 2012 367, identifies the states and circumstances in which the IRS will not require an express provision for the distribution of assets upon dissolution in the articles of organization. Turbotax 2012 The procedure also provides a sample of an acceptable dissolution provision for organizations required to have one. Turbotax 2012   If a named beneficiary is to be the distributee, it must be one that would qualify and would be exempt within the meaning of section 501(c)(3) at the time the dissolution takes place. Turbotax 2012 Since the named beneficiary at the time of dissolution may not be qualified, may not be in existence, or may be unwilling or unable to accept the assets of the dissolving organization, a provision should be made for distribution of the assets for one or more of the purposes specified in this chapter in the event of any such contingency. Turbotax 2012 Sample articles of organization. Turbotax 2012   See sample articles of organization in the Appendix in the back of this publication. Turbotax 2012 Educational Organizations and Private Schools If your organization wants to obtain recognition of exemption as an educational organization, you must submit complete information as to how your organization carries on or plans to carry on its educational activities, such as by conducting a school, by panels, discussions, lectures, forums, radio and television programs, or through various cultural media such as museums, symphony orchestras, or art exhibits. Turbotax 2012 In each instance, you must explain by whom and where these activities are or will be conducted and the amount of admission fees, if any. Turbotax 2012 You must submit a copy of the pertinent contracts, agreements, publications, programs, etc. Turbotax 2012 If you are organized to conduct a school, you must submit full information regarding your tuition charges, number of faculty members, number of full-time and part-time students enrolled, courses of study and degrees conferred, together with a copy of your school catalog. Turbotax 2012 See also Private Schools , discussed later. Turbotax 2012 Educational Organizations The term educational relates to: The instruction or training of individuals for the purpose of improving or developing their capabilities, or The instruction of the public on subjects useful to individuals and beneficial to the community. Turbotax 2012 Advocacy of a position. Turbotax 2012   Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. Turbotax 2012 The mere presentation of unsupported opinion is not educational. Turbotax 2012 Method not educational. Turbotax 2012   The method used by an organization to develop and present its views is a factor in determining if an organization qualifies as educational within the meaning of section 501(c)(3). Turbotax 2012 The following factors may indicate that the method is not educational. Turbotax 2012 The presentation of viewpoints unsupported by facts is a significant part of the organization's communications. Turbotax 2012 The facts that purport to support the viewpoint are distorted. Turbotax 2012 The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of emotion than of objective evaluations. Turbotax 2012 The approach used is not aimed at developing an understanding on the part of the audience because it does not consider their background or training. Turbotax 2012   Exceptional circumstances, however, may exist where an organization's advocacy may be educational even if one or more of the factors listed above are present. Turbotax 2012 Qualifying organizations. Turbotax 2012   The following types of organizations may qualify as educational: An organization, such as a primary or secondary school, a college, or a professional or trade school, that has a regularly scheduled curriculum, a regular faculty, and a regularly enrolled student body in attendance at a place where the educational activities are regularly carried on, An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs, An organization that presents a course of instruction by correspondence or through the use of television or radio, A museum, zoo, planetarium, symphony orchestra, or other similar organization, A nonprofit children's day-care center, and A credit counseling organization. Turbotax 2012 College book stores, cafeterias, restaurants, etc. Turbotax 2012   These and other on-campus organizations should submit information to show that they are controlled by and operated for the convenience of the faculty and student body or by whom they are controlled and whom they serve. Turbotax 2012 Alumni association. Turbotax 2012   An alumni association should establish that it is organized to promote the welfare of the university with which it is affiliated, is subject to the control of the university as to its policies and destination of funds, and is operated as an integral part of the university or is otherwise organized to promote the welfare of the college or university. Turbotax 2012 If your association does not have these characteristics, it may still be exempt as a social club if it meets the requirements described in chapter 4, under 501(c)(7) - Social and Recreation Clubs . Turbotax 2012 Athletic organization. Turbotax 2012   This type of organization must submit evidence that it is engaged in activities such as directing and controlling interscholastic athletic competitions, conducting tournaments, and prescribing eligibility rules for contestants. Turbotax 2012 If it is not so engaged, your organization may be exempt as a social club described in chapter 4. Turbotax 2012 Raising funds to be used for travel and other activities to interview and persuade prospective students with outstanding athletic ability to attend a particular university does not show an exempt purpose. Turbotax 2012 If your organization is not exempt as an educational organization, see Amateur Athletic Organizations , later in this chapter. Turbotax 2012 Private Schools Every private school filing an application for recognition of tax-exempt status must supply the IRS (on Schedule B, Form 1023) with the following information. Turbotax 2012 The racial composition of the student body, and of the faculty and administrative staff, as of the current academic year. Turbotax 2012 (This information also must be projected, so far as may be feasible, for the next academic year. Turbotax 2012 ) The amount of scholarship and loan funds, if any, awarded to students enrolled and the racial composition of students who have received the awards. Turbotax 2012 A list of the school's incorporators, founders, board members, and donors of land or buildings, whether individuals or organizations. Turbotax 2012 A statement indicating whether any of the organizations described in item (3) above have an objective of maintaining segregated public or private school education at the time the application is filed and, if so, whether any of the individuals described in item (3) are officers or active members of those organizations at the time the application is filed. Turbotax 2012 The public school district and county in which the school is located. Turbotax 2012 How to determine racial composition. Turbotax 2012   The racial composition of the student body, faculty, and administrative staff can be an estimate based on the best information readily available to the school, without requiring student applicants, students, faculty, or administrative staff to submit to the school information that the school otherwise does not require. Turbotax 2012 Nevertheless, a statement of the method by which the racial composition was determined must be supplied. Turbotax 2012 The identity of individual students or members of the faculty and administrative staff should not be included with this information. Turbotax 2012   A school that is a state or municipal instrumentality (see Instrumentalities , near the beginning of this chapter), whether or not it qualifies for exemption under section 501(c)(3), is not considered to be a private school for purposes of the following discussion. Turbotax 2012 Racially Nondiscriminatory Policy To qualify as an organization exempt from federal income tax, a private school must include a statement in its charter, bylaws, or other governing instrument, or in a resolution of its governing body, that it has a racially nondiscriminatory policy as to students and that it does not discriminate against applicants and students on the basis of race, color, or national or ethnic origin. Turbotax 2012 Also, the school must circulate information that clearly states the school's admission policies. Turbotax 2012 A racially nondiscriminatory policy toward students means that the school admits the students of any race to all the rights, privileges, programs, and activities generally accorded or made available to students at that school and that the school does not discriminate on the basis of race in administering its educational policies, admission policies, scholarship and loan programs, and athletic and other school-administered programs. Turbotax 2012 The IRS considers discrimination on the basis of race to include discrimination on the basis of color or national or ethnic origin. Turbotax 2012 The existence of a racially discriminatory policy with respect to the employment of faculty and administrative staff is indicative of a racially discriminatory policy as to students. Turbotax 2012 Conversely, the absence of racial discrimination in the employment of faculty and administrative staff is indicative of a racially nondiscriminatory policy as to students. Turbotax 2012 A policy of a school that favors racial minority groups with respect to admissions, facilities and programs, and financial assistance is not discrimination on the basis of race when the purpose and effect of this policy is to promote establishing and maintaining the school's nondiscriminatory policy. Turbotax 2012 A school that selects students on the basis of membership in a religious denomination or unit is not discriminating if membership in the denomination or unit is open to all on a racially nondiscriminatory basis. Turbotax 2012 Policy statement. Turbotax 2012   The school must include a statement of its racially nondiscriminatory policy in all its brochures and catalogs dealing with student admissions, programs, and scholarships. Turbotax 2012 Also, the school must include a reference to its racially nondiscriminatory policy in other written advertising that it uses to inform prospective students of its programs. Turbotax 2012 Publicity requirement. Turbotax 2012   The school must make its racially nondiscriminatory policy known to all segments of the general community served by the school. Turbotax 2012 Selective communication of a racially nondiscriminatory policy that a school provides solely to leaders of racial groups will not be considered an effective means of communication to make the policy known to all segments of the community. Turbotax 2012 To satisfy this requirement, the school must use one of the following two methods. Turbotax 2012 Method one. Turbotax 2012   The school can publish a notice of its racially nondiscriminatory policy in a newspaper of general circulation that serves all racial segments of the community. Turbotax 2012 Such publication must be repeated at least once annually during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. Turbotax 2012 When more than one community is served by a school, the school can publish the notice in those newspapers that are reasonably likely to be read by all racial segments in the communities that the school serves. Turbotax 2012 If this method is used, the notice must meet the following printing requirements. Turbotax 2012 It must appear in a section of the newspaper likely to be read by prospective students and their families. Turbotax 2012 It must occupy at least 3 column inches. Turbotax 2012 It must have its title printed in at least 12 point bold face type. Turbotax 2012 It must have the remaining text printed in at least 8 point type. Turbotax 2012 The following is an acceptable example of the notice:   NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS     The M School admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. Turbotax 2012 It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs. Turbotax 2012   Method two. Turbotax 2012   The school can use the broadcast media to publicize its racially nondiscriminatory policy if this use makes the policy known to all segments of the general community the school serves. Turbotax 2012 If the school uses this method, it must provide documentation showing that the means by which this policy was communicated to all segments of the general community was reasonably expected to be effective. Turbotax 2012 In this case, appropriate documentation would include copies of the tapes or scripts used and records showing that there was an adequate number of announcements. Turbotax 2012 The documentation also would include proof that these announcements were made during hours when they were likely to be communicated to all segments of the general community, that they were long enough to convey the message clearly, and that they were broadcast on radio or television stations likely to be listened to by substantial numbers of members of all racial segments of the general community. Turbotax 2012 Announcements must be made during the period of the school's solicitation for students or, in the absence of a solicitation program, during the school's registration period. Turbotax 2012 Exceptions. Turbotax 2012   The publicity requirements will not apply in the following situations. Turbotax 2012 First, if for the preceding 3 years the enrollment of a parochial or other church-related school consists of students at least 75% of whom are members of the sponsoring religious denomination or unit, the school can make known its racially nondiscriminatory policy in whatever newspapers or circulars the religious denomination or unit uses in the communities from which the students are drawn. Turbotax 2012 These newspapers and circulars can be distributed by a particular religious denomination or unit or by an association that represents a number of religious organizations of the same denomination. Turbotax 2012 If, however, the school advertises in newspapers of general circulation in the community or communities from which its students are drawn and the second exception (discussed next) does not apply to the school, then it must comply with either of the publicity requirements explained earlier. Turbotax 2012 Second, if a school customarily draws a substantial percentage of its students nationwide, worldwide, from a large geographic section or sections of the United States, or from local communities, and if the school follows a racially nondiscriminatory policy as to its students, the school may satisfy the publicity requirement by complying with the instructions explained earlier under Policy statement . Turbotax 2012   The school can demonstrate that it follows a racially nondiscriminatory policy either by showing that it currently enrolls students of racial minority groups in meaningful numbers or, except for local community schools, when minority students are not enrolled in meaningful numbers, that its promotional activities and recruiting efforts in each geographic area were reasonably designed to inform students of all racial segments in the general communities within the area of the availability of the school. Turbotax 2012 The question as to whether a school demonstrates such a policy satisfactorily will be determined on the basis of the facts and circumstances of each case. Turbotax 2012   The IRS recognizes that the failure by a school drawing its students from local communities to enroll racial minority group students may not necessarily indicate the absence of a racially nondiscriminatory policy when there are relatively few or no such students in these communities. Turbotax 2012 Actual enrollment is, however, a meaningful indication of a racially nondiscriminatory policy in a community in which a public school or schools became subject to a desegregation order of a federal court or are otherwise expressly obligated to implement a desegregation plan under the terms of any written contract or other commitment to which any federal agency was a party. Turbotax 2012   The IRS encourages schools to satisfy the publicity requirement by using either of the methods described earlier, even though a school considers itself to be within one of the Exceptions. Turbotax 2012 The IRS believes that these publicity requirements are the most effective methods to make known a school's racially nondiscriminatory policy. Turbotax 2012 In this regard, it is each school's responsibility to determine whether either of the exceptions applies. Turbotax 2012 Such responsibility will prepare the school, if it is audited by the IRS, to demonstrate that the failure to publish its racially nondiscriminatory policy in accordance with either one of the publicity requirements was justified by one of the exceptions. Turbotax 2012 Also, a school must be prepared to demonstrate that it has publicly disavowed or repudiated any statements purported to have been made on its behalf (after November 6, 1975) that are contrary to its publicity of a racially nondiscriminatory policy as to students, to the extent that the school or its principal official was aware of these statements. Turbotax 2012 Facilities and programs. Turbotax 2012   A school must be able to show that all of its programs and facilities are operated in a racially nondiscriminatory manner. Turbotax 2012 Scholarship and loan programs. Turbotax 2012   As a general rule, all scholarship or other comparable benefits obtainable at the school must be offered on a racially nondiscriminatory basis. Turbotax 2012 This must be known throughout the general community being served by the school and should be referred to in its publicity. Turbotax 2012 Financial assistance programs, as well as scholarships and loans made under financial assistance programs, that favor members of one or more racial minority groups and that do not significantly detract from or are designed to promote a school's racially nondiscriminatory policy will not adversely affect the school's exempt status. Turbotax 2012 Certification. Turbotax 2012   An individual authorized to take official action on behalf of a school that claims to be racially nondiscriminatory as to students must certify annually, under penalties of perjury, on Schedule E (Form 990 or 990-EZ) or Form 5578, Annual Certification of Racial Nondiscrimination for a Private School Exempt From Federal Income Tax, whichever applies, that to the best of his or her knowledge and belief the school has satisfied all requirements that apply, as previously explained. Turbotax 2012   Failure to comply with the guidelines ordinarily will result in the proposed revocation of the exempt status of a school. Turbotax 2012 Recordkeeping requirements. Turbotax 2012 With certain exceptions, given later, each exempt private school must maintain the following records for a minimum period of 3 years, beginning with the year after the year of compilation or acquisition. Turbotax 2012 Records indicating the racial composition of the student body, faculty, and administrative staff for each academic year. Turbotax 2012 Records sufficient to document that scholarship and other financial assistance is awarded on a racially nondiscriminatory basis. Turbotax 2012 Copies of all materials used by or on behalf of the school to solicit contributions. Turbotax 2012 Copies of all brochures, catalogs, and advertising dealing with student admissions, programs, and scholarships. Turbotax 2012 (Schools advertising nationally or in a large geographic segment or segments of the United States need only maintain a record sufficient to indicate when and in what publications their advertisements were placed. Turbotax 2012 ) The racial composition of the student body, faculty, and administrative staff can be determined in the same manner as that described at the beginning of this section. Turbotax 2012 However, a school cannot discontinue maintaining a system of records that reflect the racial composition of its students, faculty, and administrative staff used on November 6, 1975, unless it substitutes a different system that compiles substantially the same information, without advance approval of the IRS. Turbotax 2012 The IRS does not require that a school release any personally identifiable records or personal information except in accordance with the requirements of the Family Educational Rights and Privacy Act of 1974. Turbotax 2012 Similarly, the IRS does not require a school to keep records prohibited under state or federal law. Turbotax 2012 Exceptions. Turbotax 2012   The school does not have to independently maintain these records for IRS use if both of the following are true. Turbotax 2012 Substantially the same information has been included in a report or reports filed with an agency or agencies of federal, state, or local governments, and this information is current within 1 year. Turbotax 2012 The school maintains copies of these reports from which this information is readily obtainable. Turbotax 2012 If these reports do not include all of the information required, as discussed earlier, records providing such remaining information must be maintained by the school for IRS use. Turbotax 2012 Failure to maintain records. Turbotax 2012   Failure to maintain or to produce the required records and information, upon proper request, will create a presumption that the organization has failed to comply with these guidelines. Turbotax 2012 Organizations Providing Insurance An organization described in sections 501(c)(3) or 501(c)(4) may be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. Turbotax 2012 However, this rule does not apply to state-sponsored organizations described in sections 501(c)(26) or 501(c)(27), which are discussed in chapter 4, or to charitable risk pools, discussed next. Turbotax 2012 Charitable Risk Pools A charitable risk pool is treated as organized and operated exclusively for charitable purposes if it: Is organized and operated only to pool insurable risks of its members (not including risks related to medical malpractice) and to provide information to its members about loss control and risk management, Consists only of members that are section 501(c)(3) organizations exempt from tax under section 501(a), Is organized under state law authorizing this type of risk pooling, Is exempt from state income tax (or will be after qualifying as a section 501(c)(3) organization), Has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, Is controlled by a board of directors elected by its members, and Is organized under documents requiring that: Each member be a section 501(c)(3) organization exempt from tax under section 501(a), Each member that receives a final determination that it no longer qualifies under section 501(c)(3) notify the pool immediately, and Each insurance policy issued by the pool provide that it will not cover events occurring after a final determination described in (b). Turbotax 2012 Other Section 501(c)(3) Organizations In addition to the information required for all organizations, as described earlier, you should include any other information described in this section. Turbotax 2012 Charitable Organizations If your organization is applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest. Turbotax 2012 Some examples of this type of organization are those organized for: Relief of the poor, the distressed, or the underprivileged, Advancement of religion, Advancement of education or science, Erection or maintenance of public buildings, monuments, or works, Lessening the burdens of government, Lessening of neighborhood tensions, Elimination of prejudice and discrimination, Defense of human and civil rights secured by law, and Combating community deterioration and juvenile delinquency. Turbotax 2012 The rest of this section contains a description of the information to be provided by certain specific organizations. Turbotax 2012 This information is in addition to the required inclusions described in chapter 1, and other statements requested on Form 1023. Turbotax 2012 Each of the following organizations must submit the information described. Turbotax 2012 Charitable organization supporting education. Turbotax 2012   Submit information showing how your organization supports education — for example, contributes to an existing educational institution, endows a professorial chair, contributes toward paying teachers' salaries, or contributes to an educational institution to enable it to carry on research. Turbotax 2012 Scholarships. Turbotax 2012   If the organization awards or plans to award scholarships, complete Schedule H of Form 1023. Turbotax 2012 Also, submit the following: Criteria used for selecting recipients, including the rules of eligibility. Turbotax 2012 How and by whom the recipients are or will be selected. Turbotax 2012 If awards are or will be made directly to individuals, whether information is required assuring that the student remains in school. Turbotax 2012 If awards are or will be made to recipients of a particular class, for example, children of employees of a particular employer— Whether any preference is or will be accorded an applicant by reason of the parent's position, length of employment, or salary, Whether as a condition of the award the recipient must upon graduation accept employment with the company, and Whether the award will be continued even if the parent's employment ends. Turbotax 2012 A copy of the scholarship application form and any brochures or literature describing the scholarship program. Turbotax 2012 Hospital. Turbotax 2012   If you are organized to operate a charitable hospital, complete and attach Section I of Schedule C, Form 1023. Turbotax 2012   If your hospital was transferred to you from proprietary ownership, complete and attach Schedule G of Form 1023. Turbotax 2012 You must attach a list showing: The names of the active and courtesy staff members of the proprietary hospital, as well as the names of your medical staff members after the transfer to nonprofit ownership, and The names of any doctors who continued to lease office space in the hospital after its transfer to nonprofit ownership and the amount of rent paid. Turbotax 2012 Submit also an appraisal showing the fair rental value of the rented space. Turbotax 2012 Clinic. Turbotax 2012   If you are organized to operate a clinic, attach a statement including: A description of the facilities and services, To whom the services are offered, such as the public at large or a specific group, How charges are determined, such as on a profit basis, to recover costs, or at less than cost, By whom administered and controlled, Whether any of the professional staff (that is, those who perform or will perform the clinical services) also serve or will serve in an administrative capacity, and How compensation paid the professional staff is or will be determined. Turbotax 2012 Home for the aged. Turbotax 2012   If you are organized to operate a home for the aged, complete and attach Schedule F of Form 1023 and required attachments. Turbotax 2012 Community nursing bureau. Turbotax 2012   If you provide a nursing register or community nursing bureau, provide information showing that your organization will be operated as a community project and will receive its primary support from public contributions to maintain a nonprofit register of qualified nursing personnel, including graduate nurses, unregistered nursing school graduates, licensed attendants and practical nurses for the benefit of hospitals, health agencies, doctors, and individuals. Turbotax 2012 Organization providing loans. Turbotax 2012   If you make, or will make, loans for charitable and educational purposes, submit the following information. Turbotax 2012 An explanation of the circumstances under which such loans are, or will be, made. Turbotax 2012 Criteria for selection, including the rules of eligibility. Turbotax 2012 How and by whom the recipients are or will be selected. Turbotax 2012 Manner of repayment of the loan. Turbotax 2012 Security required, if any. Turbotax 2012 Interest charged, if any, and when payable. Turbotax 2012 Copies in duplicate of the loan application and any brochures or literature describing the loan program. Turbotax 2012 Public-interest law firms. Turbotax 2012   If your organization was formed to litigate in the public interest (as opposed to providing legal services to the poor), such as in the area of protection of the environment, you should submit the following information. Turbotax 2012 How the litigation can reasonably be said to be representative of a broad public interest rather than a private one. Turbotax 2012 Whether the organization will accept fees for its services. Turbotax 2012 A description of the cases litigated or to be litigated and how they benefit the public generally. Turbotax 2012 Whether the policies and program of the organization are the responsibility of a board or committee representative of the public interest, which is neither controlled by employees or persons who litigate on behalf of the organization nor by any organization that is not itself an organization described in this chapter. Turbotax 2012 Whether the organization is operated, through sharing of office space or otherwise, in a way to create identification or confusion with a particular private law firm. Turbotax 2012 Whether there is an arrangement to provide, directly or indirectly, a deduction for the cost of litigation that is for the private benefit of the donor. Turbotax 2012 Acceptance of attorneys' fees. Turbotax 2012   A nonprofit public-interest law firm can accept attorneys' fees in public-interest cases if the fees are paid directly by its clients and the fees are not more than the actual costs incurred in the case. Turbotax 2012 Upon undertaking a representation, the organization cannot withdraw from the case because the litigant is unable to pay the fee. Turbotax 2012   Firms can accept fees awarded or approved by a court or an administrative agency and paid by an opposing party if the firms do not use the likelihood or probability of fee awards as a consideration in the selection of cases. Turbotax 2012 All fee awards must be paid to the organization and not to its individual staff attorneys. Turbotax 2012 Instead, a public-interest law firm can reasonably compensate its staff attorneys, but only on a straight salary basis. Turbotax 2012 Private attorneys, whose services are retained by the firm to assist it in particular cases, can be compensated by the firm, but only on a fixed fee or salary basis. Turbotax 2012   The total amount of all attorneys' fees (court awarded and those received from clients) must not be more than 50% of the total cost of operations of the organization's legal functions, calculated over a 5-year period. Turbotax 2012   If, in order to carry out its program, an organization violates applicable canons of ethics, disrupts the judicial system, or engages in any illegal action, the organization will jeopardize its exemption. Turbotax 2012 Religious Organizations To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines. Turbotax 2012 That the particular religious beliefs of the organization are truly and sincerely held. Turbotax 2012 That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. Turbotax 2012 Therefore, your group (or organization) may not qualify for treatment as an exempt religious organization for tax purposes if its actions, as contrasted with its beliefs, are contrary to well established and clearly defined public policy. Turbotax 2012 If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs. Turbotax 2012 Churches. Turbotax 2012   Although a church, its integrated auxiliaries, or a convention or association of churches is not required to file Form 1023 to be exempt from federal income tax or to receive tax deductible contributions, the organization may find it advantageous to obtain recognition of exemption. Turbotax 2012 In this event, you should submit information showing that your organization is a church, synagogue, association or convention of churches, religious order, or religious organization that is an integral part of a church, and that it is engaged in carrying out the function of a church. Turbotax 2012   In determining whether an admittedly religious organization is also a church, the IRS does not accept every assertion that the organization is a church. Turbotax 2012 Because beliefs and practices vary so widely, there is no single definition of the word church for tax purposes. Turbotax 2012 The IRS considers the facts and circumstances of each organization applying for church status. Turbotax 2012 Convention or association of churches. Turbotax 2012   Any organization that is otherwise a convention or association of churches will not fail to qualify as a church merely because the membership of the organization includes individuals as well as churches or because the individuals have voting rights in the organization. Turbotax 2012 Integrated auxiliaries. Turbotax 2012   An organization is an integrated auxiliary of a church if all the following are true. Turbotax 2012 The organization is described both in sections 501(c)(3) and 509(a)(1), 509(a)(2), or 509(a)(3). Turbotax 2012 It is affiliated with a church or a convention or association of churches. Turbotax 2012 It is internally supported. Turbotax 2012 An organization is internally supported unless both of the following are true. Turbotax 2012 It offers admissions, goods, services, or facilities for sale, other than on an incidental basis, to the general public (except goods, services, or facilities sold at a nominal charge or for a small part of the cost). Turbotax 2012 It normally gets more than 50% of its support from a combination of governmental sources, public solicitation of contributions, and receipts from the sale of admissions, goods, performance of services, or furnishing of facilities in activities that are not unrelated trades or businesses. Turbotax 2012 Special rule. Turbotax 2012   Men's and women's organizations, seminaries, mission societies, and youth groups that satisfy (1) and (2) shown earlier are integrated auxiliaries of a church even if they are not internally supported. Turbotax 2012   In order for an organization (including a church and religious organization) to qualify for tax exemption, no part of its net earnings can inure to any individual. Turbotax 2012   Although an individual is entitled to a charitable deduction for contributions to a church, the assignment or similar transfer of compensation for personal services to a church generally does not relieve a taxpayer of federal income tax liability on the compensation, regardless of the motivation behind the transfer. Turbotax 2012 Scientific Organizations You must show that your organization's research will be carried on in the public interest. Turbotax 2012 Scientific research will be considered to be in the public interest if the results of the research (including any patents, copyrights, processes, or formulas) are made available to the public on a nondiscriminatory basis; if the research is performed for the United States or a state, county, or municipal government; or if the research is carried on for one of the following purposes. Turbotax 2012 Aiding in the scientific education of college or university students. Turbotax 2012 Obtaining scientific information that is published in a treatise, thesis, trade publication, or in any other form th
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Funded by the insurance premiums it collects and other investments, the Pension Benefit Guaranty Corporation insures and guarantees private sector workers' pensions. The contact information below is primarily for workers or retirees. If you are a plan sponsor or administrator, use the contact link below to find the appropriate information.

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The Turbotax 2012

Turbotax 2012 33. Turbotax 2012   Credit for the Elderly or the Disabled Table of Contents Introduction Useful Items - You may want to see: Are You Eligible for the Credit?Qualified Individual Income Limits How to Claim the CreditCredit Figured for You Credit Figured by You Introduction If you qualify, you may be able to reduce the tax you owe by taking the credit for the elderly or the disabled which is figured on Schedule R (Form 1040A or 1040). Turbotax 2012 This chapter explains the following. Turbotax 2012 Who qualifies for the credit for the elderly or the disabled. Turbotax 2012 How to claim the credit. Turbotax 2012 You may be able to take the credit for the elderly or the disabled if: You are age 65 or older at the end of 2013, or You retired on permanent and total disability and have taxable disability income. Turbotax 2012 Useful Items - You may want to see: Publication 524 Credit for the Elderly or the Disabled 554 Tax Guide for Seniors Form (and Instruction) Schedule R (Form 1040A or 1040) Credit for the Elderly or the Disabled Are You Eligible for the Credit? You can take the credit for the elderly or the disabled if you meet both of the following requirements. Turbotax 2012 You are a qualified individual. Turbotax 2012 Your income is not more than certain limits. Turbotax 2012 You can use Figure 33-A and Table 33-1 as guides to see if you are eligible for the credit. Turbotax 2012 Use Figure 33-A first to see if you are a qualified individual. Turbotax 2012 If you are, go to Table 33-1 to make sure your income is not too high to take the credit. Turbotax 2012 You can take the credit only if you file Form 1040 or Form 1040A. Turbotax 2012 You cannot take the credit if you file Form 1040EZ. Turbotax 2012 Qualified Individual You are a qualified individual for this credit if you are a U. Turbotax 2012 S. Turbotax 2012 citizen or resident alien, and either of the following applies. Turbotax 2012 You were age 65 or older at the end of 2013. Turbotax 2012 You were under age 65 at the end of 2013 and all three of the following statements are true. Turbotax 2012 You retired on permanent and total disability (explained later). Turbotax 2012 You received taxable disability income for 2013. Turbotax 2012 On January 1, 2013, you had not reached mandatory retirement age (defined later under Disability income ). Turbotax 2012 Age 65. Turbotax 2012   You are considered to be age 65 on the day before your 65th birthday. Turbotax 2012 Therefore, if you were born on January 1, 1949, you are considered to be age 65 at the end of 2013. Turbotax 2012 U. Turbotax 2012 S. Turbotax 2012 Citizen or Resident Alien You must be a U. Turbotax 2012 S. Turbotax 2012 citizen or resident alien (or be treated as a resident alien) to take the credit. Turbotax 2012 Generally, you cannot take the credit if you were a nonresident alien at any time during the tax year. Turbotax 2012 Exceptions. Turbotax 2012   You may be able to take the credit if you are a nonresident alien who is married to a U. Turbotax 2012 S. Turbotax 2012 citizen or resident alien at the end of the tax year and you and your spouse choose to treat you as a U. Turbotax 2012 S. Turbotax 2012 resident alien. Turbotax 2012 If you make that choice, both you and your spouse are taxed on your worldwide incomes. Turbotax 2012 If you were a nonresident alien at the beginning of the year and a resident alien at the end of the year, and you were married to a U. Turbotax 2012 S. Turbotax 2012 citizen or resident alien at the end of the year, you may be able to choose to be treated as a U. Turbotax 2012 S. Turbotax 2012 resident alien for the entire year. Turbotax 2012 In that case, you may be allowed to take the credit. Turbotax 2012 For information on these choices, see chapter 1 of Publication 519, U. Turbotax 2012 S. Turbotax 2012 Tax Guide for Aliens. Turbotax 2012 Married Persons Generally, if you are married at the end of the tax year, you and your spouse must file a joint return to take the credit. Turbotax 2012 However, if you and your spouse did not live in the same household at any time during the tax year, you can file either a joint return or separate returns and still take the credit. Turbotax 2012 Head of household. Turbotax 2012   You can file as head of household and qualify to take the credit, even if your spouse lived with you during the first 6 months of the year, if you meet certain tests. Turbotax 2012 See Head of Household in chapter 2 for the tests you must meet. Turbotax 2012 Under Age 65 If you are under age 65 at the end of 2013, you can qualify for the credit only if you are retired on permanent and total disability (discussed next) and have taxable disability income (discussed later under Disability income ). Turbotax 2012 You are retired on permanent and total disability if: You were permanently and totally disabled when you retired, and You retired on disability before the close of the tax year. Turbotax 2012 Even if you do not retire formally, you may be considered retired on disability when you have stopped working because of your disability. Turbotax 2012 If you retired on disability before 1977, and were not permanently and totally disabled at the time, you can qualify for the credit if you were permanently and totally disabled on January 1, 1976, or January 1, 1977. Turbotax 2012 Permanent and total disability. Turbotax 2012    You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. Turbotax 2012 A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death. Turbotax 2012 See Physician's statement , later. Turbotax 2012 Substantial gainful activity. Turbotax 2012   Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. Turbotax 2012 Full-time work (or part-time work done at your employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity. Turbotax 2012   Substantial gainful activity is not work you do to take care of yourself or your home. Turbotax 2012 It is not unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. Turbotax 2012 However, doing this kind of work may show that you are able to engage in substantial gainful activity. Turbotax 2012    The fact that you have not worked for some time is not, of itself, conclusive evidence that you cannot engage in substantial gainful activity. Turbotax 2012 Sheltered employment. Turbotax 2012   Certain work offered at qualified locations to physically or mentally impaired persons is considered sheltered employment. Turbotax 2012 These qualified locations are in sheltered workshops, hospitals, and similar institutions, homebound programs, and Department of Veterans Affairs (VA) sponsored homes. Turbotax 2012   Compared to commercial employment, pay is lower for sheltered employment. Turbotax 2012 Therefore, one usually does not look for sheltered employment if he or she can get other employment. Turbotax 2012 The fact that one has accepted sheltered employment is not proof of the person's ability to engage in substantial gainful activity. Turbotax 2012 Physician's statement. Turbotax 2012   If you are under age 65, you must have your physician complete a statement certifying that you were permanently and totally disabled on the date you retired. Turbotax 2012 You can use the statement in the Instructions for Schedule R. Turbotax 2012    Figure 33-A. Turbotax 2012 Are You a Qualified Individual? This image is too large to be displayed in the current screen. Turbotax 2012 Please click the link to view the image. Turbotax 2012 Figure 33-A Are You a Qualified Individual?   You do not have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records. Turbotax 2012 Veterans. Turbotax 2012   If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician's statement you are required to keep. Turbotax 2012 VA Form 21-0172 must be signed by a person authorized by the VA to do so. Turbotax 2012 You can get this form from your local VA regional office. Turbotax 2012 Physician's statement obtained in earlier year. Turbotax 2012   If you got a physician's statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2013, you may not need to get another physician's statement for 2013. Turbotax 2012 For a detailed explanation of the conditions you must meet, see the instructions for Schedule R, Part II. Turbotax 2012 If you meet the required conditions, check the box on your Schedule R, Part II, line 2. Turbotax 2012   If you checked box 4, 5, or 6 in Part I of Schedule R, enter in the space above the box on line 2 in Part II the first name(s) of the spouse(s) for whom the box is checked. Turbotax 2012 Table 33-1. Turbotax 2012 Income Limits IF your filing status is . Turbotax 2012 . Turbotax 2012 . Turbotax 2012 THEN, even if you qualify (see Figure 33-A ), you CANNOT take the credit if. Turbotax 2012 . Turbotax 2012 . Turbotax 2012   Your adjusted gross income (AGI)* is equal to or more than. Turbotax 2012 . Turbotax 2012 . Turbotax 2012     OR the total of your nontaxable social security and other nontaxable pension(s), annuities, or disability income is equal to or more than. Turbotax 2012 . Turbotax 2012 . Turbotax 2012   single, head of household, or qualifying widow(er) with dependent child   $17,500     $5,000   married filing jointly and only one spouse qualifies in Figure 33-A   $20,000     $5,000   married filing jointly and both spouses qualify in Figure 33-A   $25,000     $7,500   married filing separately and you lived apart from your spouse for all of 2013   $12,500     $3,750   * AGI is the amount on Form 1040A, line 22, or Form 1040, line 38. Turbotax 2012 Disability income. Turbotax 2012   If you are under age 65, you must also have taxable disability income to qualify for the credit. Turbotax 2012 Disability income must meet both of the following requirements. Turbotax 2012 It must be paid under your employer's accident or health plan or pension plan. Turbotax 2012 It must be included in your income as wages (or payments instead of wages) for the time you are absent from work because of permanent and total disability. Turbotax 2012 Payments that are not disability income. Turbotax 2012   Any payment you receive from a plan that does not provide for disability retirement is not disability income. Turbotax 2012 Any lump-sum payment for accrued annual leave that you receive when you retire on disability is a salary payment and is not disability income. Turbotax 2012   For purposes of the credit for the elderly or the disabled, disability income does not include amounts you receive after you reach mandatory retirement age. Turbotax 2012 Mandatory retirement age is the age set by your employer at which you would have had to retire, had you not become disabled. Turbotax 2012 Income Limits To determine if you can claim the credit, you must consider two income limits. Turbotax 2012 The first limit is the amount of your adjusted gross income (AGI). Turbotax 2012 The second limit is the amount of nontaxable social security and other nontaxable pensions, annuities, or disability income you received. Turbotax 2012 The limits are shown in Table 33-1. Turbotax 2012 If your AGI and nontaxable pensions, annuities, or disability income are less than the income limits, you may be able to claim the credit. Turbotax 2012 See How to Claim the Credit , later. Turbotax 2012 If either your AGI or your nontaxable pensions, annuities, or disability income are equal to or more than the income limits, you cannot take the credit. Turbotax 2012 How to Claim the Credit You can figure the credit yourself or the Internal Revenue Service will figure it for you. Turbotax 2012 Credit Figured for You If you choose to have the IRS figure the credit for you, read the following discussion for the form you will file (Form 1040 or 1040A). Turbotax 2012 If you want the IRS to figure your tax, see chapter 30. Turbotax 2012 Form 1040. Turbotax 2012   If you want the IRS to figure your credit, see Form 1040 Line Entries under Tax Figured by IRS in chapter 30. Turbotax 2012 Form 1040A. Turbotax 2012   If you want the IRS to figure your credit, see Form 1040A Line Entries under Tax Figured by IRS in chapter 30. Turbotax 2012 Credit Figured by You If you choose to figure the credit yourself, fill out the front of Schedule R. Turbotax 2012 Next, fill out Schedule R, Part III. Turbotax 2012 If you file Form 1040A, enter the amount from Schedule R, line 22, on Form 1040A, line 30. Turbotax 2012 If you file Form 1040, include the amount from Schedule R, line 22, on line 53; check box c, and enter “Sch R” on the line next to that box. Turbotax 2012 For a step-by-step discussion about filling out Part III of Schedule R, see Figuring the Credit Yourself in Publication 524. Turbotax 2012 Limit on credit. Turbotax 2012   The amount of the credit you can claim is generally limited to the amount of your tax. Turbotax 2012 Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited. 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