Starting a not-for-profit just to reduce your tax liability is a bad idea.
Tax-exempt organizations are exempted from paying income tax and federal unemployment tax… but they might have other tax liabilities that they’re responsible for.
In the last couple of years, I’ve had the chance to help several small not-for-profits that were trying to get off the ground. One of the first questions they have is: can we be a 501(c)(3)?
A common misconception people have about charitable contributions is that anything given to a not-for-profit counts as a deduction.
The difference between not-for-profit and tax-exempt is: one is a term relating to state law, while one is a tax term.