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Most people assume that all non-profit organizations are naturally and automatically tax-exempt.  That is false.  Moreover, people often erroneously assume that donations to non-profit or tax-exempt organizations are tax deductible charitable contributions.  That, too, is not always the case.

Non-profit status is a state law concept.  For example, many non-profit organizations in Utah are incorporated under the Utah Revised Non-Profit Corporation Act.  In contrast, tax-exempt status is a federal tax concept.  Incorporating as a non-profit organization at the state level does not automatically grant the organization exemption from federal income tax.  To qualify as exempt from federal income taxes, an organization must meet requirements set forth in the Internal Revenue Code, and apply to the IRS for recognition of their tax-exempt status.

Thus, all tax-exempt organizations are formed as non-profits, but not all non-profits are tax-exempt.

In addition, not all donations to tax-exempt organizations are tax-deductible by the donor as charitable contributions.  That’s because there are different types of tax-exempt organizations.  Only donations to 501(c)(3) charitable tax-exempt organizations are tax deductible.  To be a 501(c)(3) charity the organization must be organized and operated exclusively for one or more of the following purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or preventing cruelty to children or animals.

To verify whether your donations to a specific non-profit organization are tax-deductible charitable contributions, follow this link: www.irs.gov/app/pub-78/