Nonprofit, 501(c)(3), and tax exempt are terms that are often used interchangeably. However, these terms do not mean exactly the same thing. A nonprofit organization is not necessarily tax exempt, but it can be with special features granted by the IRS. Understanding the differences between the two terms is important while filing your 990-N or 990 EZ forms on File 990.


Nonprofit refers to a corporation that is created for a nonprofit purpose, usually a cause, mission, or community need. Because the organization serves a purpose to the public, it receives special treatments by law. Contrary to popular belief, nonprofit corporations are actually able to make a profit, but the main focus of the organization can not be profit-making. There are many different branches within nonprofit organizations that distinguish themselves based on what the cause for the nonprofit is. Some of these branches include nonprofit corporations, unincorporated associations, and charitable trusts.


501(c)(3) refers to a nonprofit organization that is specially recognized by the IRS because of its charitable programs. These organizations are granted tax exemption by the IRS. The (c) & (3) refer to specific tax categories in the Internal Revenue Code. A nonprofit organization that has been granted this status can also utilize write-off donations.

Tax Exemption

Tax exemption is the product of a 501(c)(3) organization that is granted by the IRS. This status exempts nonprofits from needing to pay corporate income taxes on any revenue related to the purposes of the nonprofit organization. To apply for this status, a nonprofit must be classified in one of the 28 different categories of nonprofit organizations, including trade, research, and religious associations.

Learn More With File 990

The differences between a nonprofit, 501(c)(3), and tax exempt organization can be difficult to comprehend, but we hope that this quick guide helped to explicate the specific details of each. File 990 is the leading nonprofit tax e-filing software that allows organizations to securely and easily complete 990-N and 990 EZ forms online. Read our blog for more interesting information like this and professional insight on nonprofit tax filing.

Run A Nonprofit?

With File 990, you can easily file your 990-N or 990 EZ forms without risking losing tax exempt status. We remind you every year while also retaining your profile so you never have to stress about forgetting or losing your tax information again. File your 990-N or 990 EZ forms today!