Form 1023 vs. 1023-EZ: Making the Right Choice for Your Nonprofit Start-Up

ARTICLE | January 17, 2025

Authored by Vasquez + Company

If you’re starting a nonprofit, especially one aiming for 501(c)(3) status, you’ll quickly discover there are two main routes to obtain official recognition from the IRS: the standard Form 1023 and the streamlined Form 1023-EZ. Both set you on the path toward federal tax exemption, which can lead to critical benefits like donor deductibility and public recognition of your charitable mission. Choosing the most suitable form depends on a variety of factors, from the size of your projected budget to the complexity of your programs. Understanding the differences can help you avoid stumbling blocks as you set up your organization.

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Deciding whether to submit Form 1023 or Form 1023-EZ can shape the early trajectory of your nonprofit. The full form is more expensive and time-consuming but suitable for larger or more complex organizations. The EZ version offers a faster, more cost-effective route for smaller groups with limited assets and modest income projections. When in doubt, a clear-eyed review of your organization’s budget plans and a conversation with advisors can make all the difference.

By taking the time to select the proper application, you not only avoid unnecessary pitfalls but also bolster your nonprofit’s credibility from day one. The IRS wants to see that you’re equipped for the mission and responsible with your finances. Ensure your nonprofit meets the criteria for your application of choice, gather the right documentation, and file in a way that presents a clear and accurate picture of your aims. It’s a powerful step in reinforcing the public’s trust in your charitable work, helping you launch and grow your efforts with confidence.

Our firm provides the information for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. This article is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.