Can I get a tax exempt status?

[bbqpops]

What is the name of your state (only U.S. law)? Nebraska


..for my charitable cook team? I have a competition cook team. We have been doing ok as far as contests go. However, we have a small problem. We have started to win. (I know, tough problem to have.)

The winnings have been split up between tithing to our church, giving half of the remainder to our churches small groups fund, then using the balance to further our ventures on the circuit. We also use the funds to cook for other non-profits orgs, to help with fundraisers and the like.

Not a single team member has profited from winnings.

I am worried about my tax bill at the end of the year showing that I "made" money doing bbq. Most winners are 1099'd at the end of the year.

Is this worth me pursuing for non-profit tax exempt?

Your expertise is appreciated. Thank You.

 

[tranquility]

Not a single team member has profited from winnings.

Sure they did:

The winnings have been split up between tithing to our church, giving half of the remainder to our churches small groups fund, then using the balance to further our ventures on the circuit.

Each of those things are profiting from winnings. In the first two there is also a tax deduction, and, in the latter, a direct benefit.

Is this worth me pursuing for non-profit tax exempt?

Nope.

You have a schedule C. You earn money. You deduct what it costs to earn the money. (What you spend to "further your ventures".) That will leave some left. You can donate it to valid charities without receiving anything and it will be like it was not income. The only issue will be the SE tax (SS and medicare) on the earnings above a certain amount. (Maybe some income limit issues, depending on your whole tax situation, as well.)

Odds are it really isn't going to make a whole lot of difference how you organize. Compliance costs will probably exceed tax savings. But, how much are we talking about?

 

[bbqpops]

Just so far, 2 contests into our season, a few thousand. We have at least six more to attend.

 

[LdiJ]

Just so far, 2 contests into our season, a few thousand. We have at least six more to attend.

Then I suggest, that before you tithe anything to your churches, that you hold back enough to cover your federal, state and self-employment taxes, and enough to further your ventures...because I agree with Tranq, you are schedule C on this one, you are not a non-profit organization.

 

[Mass_Shyster]

..for my charitable cook team?

How is this charitable?

http://www.irs.gov/charities/charitable/article/0,,id=175418,00.html

Exempt Purposes - Internal Revenue Code Section 501(c)(3)


The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.