Tax Savings

Working For A Non Profit Tax Benefits

Non-profit organizations are created to achieve social, charitable, cultural and other goals, to meet the spiritual and other non-material needs of citizens, as well as for purposes aimed at achieving public goods. But despite the fact that non-profit organizations are called upon to satisfy the intangible needs of a person, employees who work in non-profit organizations must receive wages and pay Social Security taxes on the earnings of $108.28 or more.

Employee’s income tax

By the name of the employee’s income tax,  it is clear that it is taken from the income received by individuals. The most understandable and common income is wages. Employee’s income tax is calculated from it, withheld and transferred to the budget by the employer, who acts as a tax agent.

Let us name the incomes of people most applicable to the work of NPOs, which are not subject to personal income tax:

  • Scholarships established by charitable foundations: In order for the tax not to be withheld, it is necessary that the charitable organization was created precisely in the form of a foundation.
  • Grants to support science and education, culture and arts.
  • International and American awards: For outstanding achievements in the field of science and technology, education, culture, literature and art, tourism, mass media.
  • Charitable assistance in cash or in kind.
  • Tuition fees: For basic and additional educational programs.
  • Payment of the cost of travel to the place of study.
  • Charitable assistance to orphans: Children left without parental care and children in families whose income per family member does not exceed the subsistence level.
  • Disaster payments: or other extraordinary circumstance.
  • Gifts from A Nonprofit Organization.
  • Grants, awards and prizes.
  • Payment for meals.


Two types of taxes, such as Social Security (6.2 percent for each) and Medicare (1.45 percent for each) taxes are paid by you and your employer. The combined employee and employer amount is paid by self-employed not-profit worker. Social security tax is 12.4 percent on earnings and Medicare tax 2.9 percent on your entire net earnings.

Working for a non-profit organization

Not all nonprofit organizations take part in Social Security program. Therefore when Social Security and Medicare taxes are not withhold from your wages by your organization. But if your earnings are more than 108.28 USD per year then you must pay Social Security and Medicare taxes.

How to be qualified for the benefits?

In one year you can receive maximum 4 credits, where 1 credit for each $1,470 of earnings (2021 y.). In order to be qualified for receiving Social Security benefits the number of credits you need depends on your age and benefit type which you are eligible.

Retirement benefits

Those people who were born in 1929 or later must have 40 credits to be eligible for Social Security retirement benefits.

Disability benefits

Your age and the time when you became disabled two factors that affect the number of credits to qualify for disability benefits.

Survivors benefits

These types of benefits are payable to your widow or widower and children. Your age and time of death are affecting the number of credits needed.

Work and receive retirement benefits

In case if you haven`t reached your full retirement age but you want to apply for benefits, you are able to work and receive Social benefits as well. There are limits on how much you can earn without reducing some or all of your retirement benefits while you are employed.

Contacting Social Security

Doing things online is the most convenient way to do business with us from anywhere. Following things you can do online: apply for benefits; get useful information; find publications; and get answers to frequently asked questions. Through your personal security account you can review your Social security statement, verify your earnings and future benefits estimates. But in case if you do not have the Internet, you can contact by 24 hours a day, 7 days a week at 1-800-772-1213.

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