Philanthropy Front and Center-Atlanta

Volunteering for a Tax Deduction? Not So Fast.

Can workshop leaders who donate their time facilitating programs at the local church claim the estimated value of the service on their taxes?

Can teachers who tutor adults in a literacy program claim a charitable deduction for the estimated value of the service provided to the organization?

The answer, according to the Internal Revenue Service, is NO! In Publication 526 the IRS details what can or can not be deducted on your taxes. Now that you know that deducting your volunteer time is not acceptable, here are some do’s of reporting.

Do report volunteer expenses related to:
• Air, rail, and bus transportation
• Out-of-pocket expenses for your car
• Taxi fares or other costs of transportation between the airport or station and your hotel
• Lodging costs
• The cost of meals.
The IRS considers the above travel expenses as non-business related, therefore the expenses are not treated like business related expenses.

Do deduct:

• Any costs associated with uniforms needed to successfully volunteer for a qualified organization. Since uniforms are not necessary to wear everyday, but are needed when volunteering, the IRS allows you to deduct them on your taxes.

• Out-of-pocket expenses. Amounts you spend performing services for a charitable organization, which qualify as charitable contributions. Be sure to keep records of any cash and noncash contributions as well.

The Independent Sector estimates a dollar value of volunteer time as $20.25 per hour for 2008. Although the individual volunteering can not deduct this amount on their taxes, organizations can use this estimate to demonstrate the in-kind support volunteers provide.

If you were counting on using your volunteer hours as tax deductions, don’t be discouraged. The gift of your time is valued by the organization and more importantly by those who will benefit from your talent and expertise.

Asia M. Hadley, Training Coordinator, Foundation Center-Atlanta

The IRS and Tax-Exempt Organizations

The Internal Revenue Service regularly publishes “Tax Tips” at their web site.  Back in the spring, they issued Tax Tip 2009-60, “Six Important Facts about Tax-Exempt Organizations.”

Taxpayers donate millions of dollars every year to charitable organizations. In this publication, the IRS lists six things you should know about the tax treatment of tax-exempt organizations:
 
1. Tax returns for tax-exempt organizations are available to the public, as are their applications for exemption.
2. The list of donors to a tax-exempt organization filed with the Form 990 is excluded from the information available for public inspection.
3. The easiest way to determine if an organization is tax-exempt or not is to ask them. You can also search in IRS Publication 78.
4. Not all exempt organizations are eligible to accept tax-deductible charitable donations.
5. Exempt organizations that are not eligible to accept tax-deductible donations are required to disclose that to potential donors.
6. You can report inappropriate activities by charities to the Exempt Organizations Examination Division . 

Looking for more information about the tax returns of foundations and nonprofits?  See our free online course, Demystifying the 990-PF, or How to Read the IRS Form 990 & Find Out What It Means, a helpful guide from the Nonprofit Coordinating Committee of New York.

Share your experiences with the IRS; you can use the comment box below.

Kayron Bearden, Reference Librarian, Atlanta

The IRS Wants Your Feedback! (Yes - Really)

While many nonprofit organizations are adapting to the new Form 990 this year, the IRS is accepting comments on the redesigned form for review and future consideration. Comments on the form and its schedules can be sent via email to Form990Revision@IRS.gov. The IRS will consider these comments when making future revisions to the Form 990, its schedules, or instructions. This information will also be used to identify areas where the agency might provide additional assistance to nonprofits, either through its monthly newsletter, EO Update, or through the IRS web site. 

The IRS is also seeking feedback on the Charities & Non-Profits section of its web site. In order to keep the site user-friendly as its content continues to expand, the IRS wants to know how nonprofit professionals are currently using the site, as well as what improvements could be made in terms of content, navigation, and other features. Visit the IRS site to read the full announcement, including specific suggestions for comments and instructions on how to submit your feedback.

Want to learn more about the Foundation Center's resources for nonprofit filings? See last month's post listing the books and other resources available in our library/learning center for help with the Form 990.

Don't forget! We'll also be hosting a workshop in collaboration with Pro Bono Partnership of Atlanta on the new Form 990 on May 29^th.

Stephen Sherman, Reference Librarian, Foundation Center-Atlanta

Looking for Help with Your Form 990 this Year?

As March rolls by and the deadline for individual tax returns looms ever closer, it is time also to think about annual filings for nonprofits. Last year, the IRS unveiled the revised Form 990, which includes new filing requirements for smaller organizations (see this article from GuideStar), expanded reporting requirements for topics such as governance, compensation, and joint ventures, and categorized reporting of fundraising activities and revenue. Listed below are some resources that will help you adapt to the new Form 990 and complete your annual filing this year.

Our FAQ on the redesigned Form 990 provides an overview of the major changes to the form, as well as links to related resources from the IRS and other organizations.

Full coverage of the redesigned Form 990, including filing instructions and frequently-asked questions, can be found at the IRS web site. 

Looking for training on how to complete the new Form 990? The IRS offers a series of web-based mini-courses covering the redesigned Form 990 and its various schedules. There are additional online courses on applying for tax-exempt status, employment issues, charitable tax deductions, unrelated business income, and more. The IRS also conducts a number of in-person Workshops for Small and Mid-Size Tax-Exempt Organizations.  Each one-day workshop is presented by an experienced tax professional and includes information on what 501(c)(3) organizations must do to keep their tax-exempt status and comply with tax obligations.

The IRS also has a section of its site devoted to more general Tax Information for Charitable Organizations, including tax exemption, filing requirements, restrictions on political activities, and the life cycle of a public charity.

The Foundation Center-Atlanta has a number of guides and handbooks for completing the Form 990 in its collection, including:

The New Form 990: Law, Policy, and Preparation (Hokoken, NJ: John Wiley & Sons, 2009) provides instructions for completing the revised Form 990. Following the overview, the chapters conform to the order of the form, looking at each part, line, and schedule of the document, explaining the pertinent laws. Written in non-technical language, the book also discusses those aspects of the new form that are controversial or have been challenged. A copy of the form is included.

The Zondervan Church and Nonprofit Organization Tax & Financial Guide (Grand Rapids, MI: Zondervan Publishing House) discusses various financial and accounting topics in plain language. Subjects covered include tax exemption, employee compensation, reporting, and charitable gifts; the book contains sample documents.

PPC's 990 Deskbook & PPC's 990 Deskbook Quick Reference Binder (Fort Worth, TX: Practitioners Publishing Company) contain in-depth information, checklists, worksheets, and other resources for filling out all versions of the Form 990.

You can find more books, articles, and other resources on this topic by searching the Catalog of Nonprofit Literature (CNL) for the subjects "Tax returns", "Taxation", or "Nonprofit organizations--accounting".

Looking ahead, the Center will also be hosting a workshop in collaboration with Pro Bono Partnership of Atlanta on What You Need to Know About the Revised Form 990 on Friday, May 29th.

Stephen Sherman, Reference Librarian, Foundation Center-Atlanta

Webinars on the New Form 990 Next Week

You probably know by now that nonprofits will need to use the new Form 990 to file their 2008 tax information. If you haven't already learned about it, you can prepare for it now with two free webinars offered next week:

Wednesday, Nov. 5, 1:00-2:00 p.m. ET
Preparing for the New Form 990: Insights From the Internal Revenue Service
Steven Clarke, Form 990 Redesign Project Manager for the IRS, will discuss changes to the Form 990 and how they could affect your organization. Ample time will be allowed for questions and answers. Presented by the Foundation Center.

Tuesday, Nov. 4, 2:00-3:00 p.m. ET
Preparing for the New Form 990 
Four IRS and tax-exempt sector experts will discuss the redesigned 990; make sure you know what parts of the forms to complete; and answer your questions to help you become familiar with and prepare for the changes now. Presented by the IRS. Register at Tax Talk Today.

Our FAQ on the new Form 990 will help you quickly find resources on this topic, if you can't wait until next week.

On a related note, check out the IRS's Tax Talk Today if you want to learn more about IRS-related topics. These FREE programs feature discussions and real time interaction with industry tax experts and professionals and IRS representatives. Viewers can email questions directly to the studio and earn continuing education credit for viewing or listening to a program. Late-breaking news from the IRS may augment or pre-empt original programming.

In addition to the live webcasts, the programs are available in the archives for up to 12 months as audio podcasts or on DVD. Please note that users must complete a free registration process to use the site.

Check out these archived programs that may interest nonprofits:

• Retirement Plan Pitfalls - July 8, 2008

• What's Hot in Employment Taxes: Independent Contractor or Employee? - Nov. 6, 2007

Older programs are available via DVD or audio CD that you can buy, but the site links to program outline and related resources. See March 13, 2007's Exempt Organizations: Emerging Issues program for an example.

What do you think about Tax Talk Today? Do you know of other useful sites or resources for nonprofit tax-related topics? We invite you to share below!

Sandy Pon, Reference Librarian, Foundation Center-Atlanta

Free Workshop: Preparing for the New 990

IRS recently completed the first substantial redesign of the Form 990, the annual information return nonprofits must file with the IRS, since the form was introduced in 1979. The revised form significantly changes the reporting requirements for many nonprofit organizations. To get a preview of the changes, please see our FAQ, "Where can I find information on the redesigned Form 990?"

Pro Bono Partnership Atlanta is presenting a free workshop designed to walk you through all the new requirements so you will be prepared when you have to file the revised form.

When: Monday, October 27, 2008 (originally scheduled for October 20th), 10:00am-11:30am

Where: Hands On Atlanta, 600 Means Street, NW, Atlanta, GA 30318 (click for directions)

Speakers: Amy Dosik and Chad Franks, Ernst & Young

Space is limited. Please arrive on time or your seat may be given away to others who are waiting to attend. To register, please email Andrea Pendleton at andrea.pendleton@pbpatl.org by Oct. 22, 2008.