Sep 9 • General discussion
🕵️‍♀️ The Hidden Taxes Nonprofits Can’t Avoid
Earning tax-exempt status is a huge milestone—but it doesn’t mean nonprofits are completely off the hook. “Tax-exempt” ≠“tax-free.”
Here are the most common taxes and reporting obligations nonprofits still face (and often overlook):
đź’¸ 1. Unrelated Business Income Tax (UBIT)
Income from activities not tied to your mission may be taxable.
👉 Examples: renting property, selling ad space, or running an unrelated side business.
đź’Ľ 2. Payroll Taxes
Like any employer, nonprofits must withhold and pay Social Security, Medicare, and unemployment taxes for staff.
🛍️ 3. Sales Tax
Rules vary widely by state. Some purchases and sales may still be taxable—even for nonprofits.
🏠4. Property Tax
Exemptions exist, but some localities may tax property that isn’t exclusively used for charitable purposes.
Why This Matters
Assuming “tax-exempt” means “no taxes” can lead to:
❌ Penalties
❌ Back taxes
❌ Risk to your 501(c)(3) status
✅ Takeaway: Tax-exempt status is a privilege—but it comes with responsibilities.
Staying informed protects your mission, resources, and reputation.
💡 Want clarity on your nonprofit’s tax exposure?
đź“… Connect with Smith CPAs and Associates for year-round compliance support.
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🕵️‍♀️ The Hidden Taxes Nonprofits Can’t Avoid
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