pmspto,

You might want to review this post 501c3 info - it does a good job of summarizing benefits of 501c3

Good luck!

Mike

This has been a great and timely discussion for me as I've been looking into registering our middle school as a 501(c)(3). People keep asking me what are the benefits for registering. After all, most people I've talked with already deduct their contributions to the PTO thinking it was a registered non-profit. Besides that, I suppose we would be able to apply for grants and perhaps attract matching corporate donations and maybe larger donations from area businesses. Are there other benefits I'm missing? The effort to fill out the 1023 is quite daunting ... I'd like to make an informed decision on the cost versus benefit.

The previous two posts covered all the basics. A few other details to keep in mind:

You will need the 1099 recepient's name, address and tax ID. The tax ID (usually an SS#) is best obtained before issuing the check. You can ask the payee to complete a W-9 (Request for Tax Payer ID) or to include it on their invoice.

1099 forms are read by machine and you cannot use forms downloaded from the internet. I obtained blanks from the local IRS office, although it looks like the service mentioned in the previous post would save this step.

Don't forget to get the Form 1096 Transmittal Document that goes with the 1099's. It also must be an original and not a downloaded copy.

Critter--the 1099 is supposed to be sent whenever at least $600 is paid to anyone for a service (including prizes and awards), when the payment is made "in the course of your trade or business." Both for profit and nonprofit organizations are subject to this requirement, individuals are not.

There are some exceptions as to who is subject to getting the 1099. For example, you do not have to send it out to anyone who is a corporation or a tax-exempt organization.

You do have to send it out for independent contractors. So, for example, we have an individual that teaches a theatre arts course; we send one out to her. We also have had some cultural arts performers who are individuals, and some of them have received payments greater than $600 over the course of the year, so they get one, too.

The deadline for sending out 1099s is January 31 for the previous calendar year. We use a web-based service at www.filetaxes.com to get ours out. Complete directions are on the IRS website; look for form 1099-MISC.

Regarding the different forms, I think this might still be a bit confused. These are all different, but related steps. See if this helps.

Form 1023 Application for Exemption- You file this to request official designation as a 501(c)(3) organization. It is - hopefully - a one-time event. The rule of thumb is that if you are operating as an independent organization and bring in $5000 or more total (for charitable purposes), then you should apply. If your funds are less, then you're basically just to small for the IRS to worry about, but you are not a by-default tax exempt org. Only if you receive 501(c)(3) status will donations to your organization be deductable for the donor.

Form 990/990EZ- This is the annual income tax return that a 501(c)(3) organization may file.
If you need to file and which one depends on income. (i.e., more than $25K) Unlike a personal income tax form (1040), the 990 is typically just an informational return. You're providing the IRS with financial info and not usually paying taxes or receiving a refund.

Form 1099MISC- Federal laws require that when payment of $600 or more per calendar year is made to an individual (non-employee) or unincorporated business for services rendered or in payment for a grant, award, or scholarship, the employer must file Form 1099-MISC with the IRS. The form is not required to be issued to corporations. Form 1099-MISC must be sent to the recipients on or before January 31 of each year and filed with the IRS on or before February 28 of each year.


ColumbusPTO - hopefully you got your other questions (about schedules) in the thread under Roberts Rules on "501c3 Filing"

JayVee - This is a digression from the original topic, but I'm curious about your 1099 filings. We pay for school assembly performers, but have never filed a 1099. Rarely is the check over $600,but sometimes it is. What do you know about 1099 filings...this is the first time I've heard it might apply to a PTO. Curious to know more.