In addition to the student loan forgiveness enacted by President Biden, and estimated to be worth between $390- $500 billion by The Tax Foundation, Congress recently passed, and the president signed, the Inflation Reduction Act. Student loan forgiveness for nonprofit employees expires on October 31, 2022.  This is not the same as the recently enacted student loan forgiveness program.  Some of the limitations in that new forgive this program to not apply to nonprofit employees.

Employees can go to https://studentaid.gov/PSLF to check their eligibility for forgiveness.

The National Council of Nonprofits put together a concise outline of how this legislation impacts nonprofit organizations. Highlights are below.

The new law provides enhanced and extended tax breaks for energy efficient construction in the form of tax credits.  Nonprofit organizations can transfer these credits to contractors and reduce the contract cost for these energy efficient systems.

Healthcare premium tax credits under the Affordable Care Act are extended for three years. Credits are increased for participants who are between 100% and 400% of the federal poverty level.

Visit the National Council of Nonprofits website for a summary of the inflation reduction act.

Penalty Relief for Late Filed Tax Returns

IRS recently issued Notice 2022-36 which provides penalty relief for 2019 and 2020 tax returns that were filed late. This penalty relief means that unpaid penalties will be forgiven and penalties that have been paid will be automatically refunded-no application is required. Delinquent returns must be filed on or before September 30, 2022 to qualify for this penalty forgiveness. Penalty relief will be for the following returns:

  • Form 1040 personal income tax returns,
  • Form 1041 trust and estate income tax returns,
  • Form 1120 corporation income tax returns,
  • Informational return such as form 1099,
  • Form 990-PF-private foundation annual filing, and
  • Form 990-T-unrelated business income tax return

Forms 990 and 990-EZ are not listed in this notice, but they are still eligible for the normal abatement request process.

More details can be found in Internal Revenue Service Notice 2022-36.

Recent tax legislation by John Heveron

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