Obtaining Federal Tax Exemption for Your California Nonprofit
Obtaining federal tax exemption for your California nonprofit provides several critical benefits and opportunities. Primarily, tax-exempt status ensures that your nonprofit is not liable for federal income taxes on money earned related to its charitable activities. In addition, this status allows donors to make tax-deductible contributions, enhancing the nonprofit's ability to fundraise and attract support. Beyond providing your organization with tax relief, many grants and funding opportunities are exclusively available to organizations with federal tax-exempt status.
STEP 1
Complete Required IRS Forms
While it is possible to form a California nonprofit on your own, consulting with an attorney or legal professional experienced in nonprofit law is advisable to ensure compliance with all relevant requirements.
The expert attorneys at Ambika Law, PC are ready to help.
Federal tax exemption reinforces your nonprofit's credibility, financial stability, and ability to effectively serve its intended community or cause. This important designation is provided by the IRS after submitting an application.
To apply for Federal Tax Exemption, take the following steps:
Review the Instructions & Informational Guides
provided by the IRSCreate an account and complete Form 1023 or Form 1023-EZ
Pay filing fees of $275-$600, depending on form used.
Completing the Form 1023 application for exempt status under Internal Revenue Code (IRC) Section 501(c)(3) may be the most challenging part of establishing your California nonprofit organization. Because of the complexities involved, we highly recommend working with an attorney experienced in California nonprofit law when applying for Federal Tax Exemption.
