Simple Tax Planning Tips for Charities

A former financial advisor in New York City, Rich Kruithoff has driven activities at the Las Vegas-based tax consulting services provider Charitable Planning Services since 2016. In his position as owner and president, Rich Kruithoff assists clients with the development of tax planning strategies that mitigate tax liability and streamline tax processes for charities.

Nonprofit organizations can encounter a number of tax obstacles. It is important, above all else, for nonprofit leaders to fully understand what nonprofit status means in relation to tax planning. For example, if a manager does not file a return for several years each tax season, the organization is immediately at risk of losing its nonprofit status. It is critical to support nonprofit leadership with all the knowledge and resources they need to effectively manage tax planning and related processes.

Nonprofits must remember to manage both local and state taxes. Charities typically pay taxes to the city or county, though their tax-exempt classification may limit these payments in certain ways. Similarly, charities should be prepared to file personal property and real estate taxes, as well as sales tax.

More simply, a failure to get organized is a quick recipe for tax mistakes. While management should be expected to maintain proper records that can be easily accessed and understood, nonprofit leaders should strongly consider working with a tax professional, such as a certified public accountant or charitable planning professional, in order to protect and maximize the benefits of nonprofit status.