LMGW Certified Public Accountants

Making the most out of a Non-Profit Organization’s Tax Return

The IRS Form 990, Return of Organization Exempt from Income Tax, is one of the most important documents that a non-profit organization prepares. The 990 provides reporting to the IRS on an organization’s programs, revenue sources, contributions, expenses and governance. One of the most important things about an organization’s 990 is that it is available for public review. Potential donors often download the organization’s 990 to gather more information before deciding to make a contribution and Press will often review the form when preparing articles about the non-profit. As you can see, it’s important that the 990 is accurate and complete.  Read more

FUTA Surtax Expired

The .2% Federal Unemployment Tax (FUTA) surtax expired on June 30, 2011 bringing the FUTA tax rate before state unemployment credits to 6%. FUTA is paid on the first $7,000 of wages paid per year per employee. Now that the surtax has expired employers will be required to separately track FUTA taxable wages before July 1, 2011 and after June 30, 2011 since the FUTA rate is different between the two periods.

The IRS will be revising Form 940, the Employer’s Annual Federal Unemployment Tax Return. There have also been talks in Congress about making the surtax permanent but so far no legislation has been passed.

IRS Increases Standard Mileage Rate

IR News Release 2011-69 announced that the IRS has increased the mileage rate for the second half of 2011.

Effective July 1, 2011 through December 31, 2011 the mileage rate for business travel is 55.5 cents per mile. Medical and moving mileage will increase to 23.5 cents per mile. The rate for charitable mileage remains unchanged at 14 cents per mile. Read more

Small Nonprofit Filing Requirements with the IRS and FTB

The Internal Revenue service issued new guidance January 13, 2011 that allows for additional small nonprofits to file a simpler tax form that contains far less information than was previously required.  Small nonprofits may be able to file Form 990-N also known as an e-Postcard for their 2010 annual information reporting as long as they receive less than $50,000 per year. Read more

Nonprofits are Eligible for Tax Credits Under the Health Care Bill

 The Internal Revenue Service has posted information on how tax-exempt organizations can claim the Small Business Health Care Tax Credit.

 In a recently updated Frequently Asked Questions page about the tax credit, the IRS stated that a tax-exempt employer as described in Section 501(c) of the Tax Code that is exempt from tax under Section 501(a) can claim the refundable credit by filing a Form 990-T with an attached Form 8941 showing the calculation of the claimed credit.

 The tax credit, provided as part of the health care reform bill, is designed to encourage small employers to offer health care coverage.  Qualifying employers must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate, must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible), and must pay average annual wages below $50,000. Both taxable (for profit) and tax-exempt entities qualify.

 The credit is worth up to 35 percent of a small business’ premium costs in 2010 or 25 percent of a tax-exempt organization’s. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).

 The credit phases out gradually for entities with average wages between $25,000 and $50,000 and for entities with the equivalent of between 10 and 25 full-time workers.

 For more information on the Small Business Health Care Credit and FAQs, visit IRS.gov.  Please contact LMGW for any questions or assistance with claiming this tax credit.