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Thanks so much to Alexander Garbera for asking a great question in response to our last post on using the internet to fundraise.  I'll do my best to answer it here.

Let me start out this post by saying up front that if you have any questions about taxes, you should definitely consult a professional - a CPA or a tax attorney, for example.
I am neither of those things, but I did go ahead and do a little bit of investigating in order to answer a question that was recently posed here. This should in no way be construed as legal advice, rather it is me sharing what I was told by my tax attorney.

Even though most of us have just finished thinking about last year's taxes, it's never too early to plan for next year. One of the readers here at NPTechNews, Alexander Garbera, asked the following question:

"Are there any tax/legal implications, even for non-profits, for soliciting donations from other states than one's own via the internet?"

What I was told is that the origin of the donation, as long as it is from the U.S., shouldn't really make a difference if the organization is a true 501(c)(3) tax-exempt organization. These organizations have their annual income taxes reviewed by the IRS, but it is typically to make sure that expenses are legitimate for tax-exempt purposes, etc.

As for the donor, he or she simply follows the rules for his or her "tax domicile." Your tax domicile is usually the state in which you live, however, some people who split their time between different states (snowbirds, for example) may have to determine where it is appropriate to file taxes. Determining your tax domicile might include using information about where you spend the most time during the year, where your vehicles are licensed, where you're registered to vote, etc. Once it's been determined, you follow that state's tax laws and regulations.

Last modified on Sunday, 19 May 2013
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