Question:

What is unrelated business income tax for non-profit organizations?

Answer:

Unrelated business income tax, or UBIT, is tax that a non-profit organization would have to pay if it is considered to be doing business that is unrelated to their charitable purpose and is receiving income from it.

Does your non-profit organization sell products or does it offer services? If it does, you have to be very careful to make sure that the way those products are sold or the way you offer those services fall in line with your charitable purpose. Non-profits usually do not pay taxes, but if the organization is considered to be doing unrelated business and is receiving income from that, it may be subject to UBIT.

Have additional questions? As always, please feel free to reach out to our team at bertie@inbetterwetrust.com. We’re happy to answer any questions you may have!