How can charities register for tax exemption for donated goods?


Quick Answer

Charities can register for tax exemption on donated goods by completing an application for recognition of exemption from federal income taxation under section 501 (a) of the Internal Revenue Code, which is known as Form 1023. The form is available as a PDF at IRS.gov.

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Full Answer

A helpful pre-application process appropriate for most charitable organizations with 501(c)(3) status, including churches and religious organizations, is available at IRS.gov. Begin the application process by clicking Information For, Charities & Non-Profits, Application for Recognition of Exemption and Application Process. The process begins with a series of questions to determine a charity's eligibility.

The prospective organization must have the appropriate legal form that identifies it as a trust, corporation or association. It must be at least three tax years old, or it must enclose financial statements for its current year and budgets for the following two years. If the charity is three tax years old, financial statements for the current year and the previous two years are required.

The charity must have an exempt purpose as outlined in Publication 557, which is available as a PDF at IRS.gov. If the charity has an exempt purpose, clicking Yes opens the next page in the online application eligibility process, on which a link to a PDF of Form 1023 is located. The form has 10 parts and entails a user fee to file.

The charity must possess an Employer Identification Number and must attach exact copies of its organizing documents to Form 1023. A complete explanation and all necessary steps in the application process are available at IRS.gov.

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