Do Charitable Organizations Pay Taxes?

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Charitable Nonprofits and Tax-Exempt Status

  • Most charitable nonprofits recognized as tax-exempt must file an annual IRS return.
  • Exceptions include church and government groups.
  • If a nonprofit doesn’t file a 990 for 3 years, the IRS automatically revokes its tax-exempt status.
  • Late filing has penalties.

Tax-Exempt Status Requirements

  • To keep tax-exempt status, nonprofits must make money from activities related to their status.
  • "Unrelated" activities may create taxable income reported to the IRS.
  • Income thresholds for 2023 are:
    • $12,950 for singles under 65, $14,700 if 65 or older.
    • $25,900 for joint married filers under 65.
    • $27,300 if one spouse is under 65 and one is 65 or older.
    • $28,700 for both spouses 65 or older.

Filing Requirements and Deductions

  • Faith groups, government organizations providing charity, and nonprofits under a parent group may be exempt from filing annual returns.
  • Donors can claim deductions over $250 by keeping contemporaneous written acknowledgment.
  • Donors to exempt churches can still claim tax deductions without the church having tax-exempt status.

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