What Is the Difference Between a 501c and a 501c3?

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Types of Tax-Exempt Organizations

  • 501(c) Organizations:
    • A 501c3 is a tax-exempt nonprofit.
    • A 501c10 is a nonprofit social welfare organization.

Differences Between 501(c) and 501(c)(3)

  • 501(c) vs 501(c)(3):
    • Both are exempt from federal income tax.
    • 501(c)(3) allows donors to deduct donations.

Establishing and Maintaining Exemption

  • Obtaining Exemption:
    • Establish a nonprofit entity.
    • Apply for tax exemption.

Common Nonprofit Options

  • 501c3 and Options:
    • Common purposes like educational activities.
    • Directors or officers cannot benefit from profits.

Qualifying and Activities

  • Qualifications for 501c:
    • Avoid discrimination.
    • Provide a reason for seeking tax exemption.
    • Three years of existence required.

Fundamentals of 501(c)(3) Organizations

  • Donations to 501(c)(3) organizations are tax-deductible.

Activities and Restrictions

  • 501(c) organizations can engage in any lawful activity.
  • 501(c)(3) organizations have more restrictions, e.g., limits on political lobbying.

Differences Between Nonprofits

  • Nonprofits face limits on activities to maintain tax-exempt status.

Summary and Comparison

  • Variances in tax treatment and legal obligations.
  • 501(c)(3) organizations have specific guidelines to follow.

Conclusion

  • Understanding the distinctions between 501(c) and 501(c)(3) is crucial.

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