Nonprofits are typically tax-exempt organizations, and you might think that precludes them from having to file any tax forms when the time comes. The IRS, though, still expects to hear something from these nonprofits: The Form 990.
So what is Form 990 for nonprofits? Here’s what you need to know.
What is Form 990?
Tax-exempt organizations like nonprofits need to file a Form 990 each year to document and report their financial information, as well as other details regarding governance and accomplishments in the previous year.
Known as an “information return”, this record can then be accessed by the public for full transparency, and by the government, who can then make sure that the organization is still eligible for its tax-exempt status.
Who Should File a Form 990?
All of the organizations who will file a form 990 are tax exempt, but not all tax exempt organizations have to file the form. Let us explain: If your organization can show gross receipts of at least $200,000, or assets of at least $500,000, you will need to file a Form 990 each year. There are some exceptions to this rule though, as organizations who report less may still be required to file abbreviated versions ofFform 990—more on that later.
Religious and political organizations, while tax-exempt, are not required to file a form 990. That includes churches, missionary organizations, faith-based schools, and government institutions. If your nonprofit has any subsidiaries or daughter companies, these will likely be listed on the main organization’s return so they do not have to file a 990.
Why File a Form 990?
Form 990 allows the IRS to be sure that a nonprofit continues to meet the criteria for tax exemption. Because the information in the form then becomes available to the public, it also encourages transparency and accountability for the organization to the community.
Plus, you can think of the 990 as yet another way to inform others about your mission and your projects. A 990 can document your accomplishments in the previous year, how employees were paid, how donor money was used, and more so that the public feels they can trust your nonprofit. That might make them more likely to invest time, money, and energy.
Which Version of Form 990 Should You File?
Of course, it’s never as simple as just one form when it comes to tax time, is it? There are a few different versions of Form 990 that you’ll need to be able to differentiate between, and it’s important that you file the right one.
The original Form 990 is the longest of all of the variations, consisting of 12 pages with 16 schedules, which are additional forms that need to be filed at the same time. File this form if:
- Your gross receipts are greater than or equal to $200,000, or
- Your total assets are greater than or equal to $500,000.
This is a shorter version of the original Form 990 and only requires you to fill out around four pages. You may still need to complete some of the schedules that come with the 990, but not all. File this form if:
- Your gross receipts total less than $200,000, and
- Your total assets are valued at less than $500,000.
Form 990-N (ePostcard)
This version can be filed easily online at IRS.gov, though if you are eligible to fill out Form 990-N you can also opt to file the standard form 990 or 990-EZ instead. File this form if:
- Your gross receipts are typically less than or equal to $50,000
If you are a private foundation, you must file a form 990-PF regardless of financial status.
What You Need to File a Form 990
If you’re getting ready to file a form 990 for your nonprofit and want to be prepared with the info you’ll need ahead of time, here’s a quick overview of what you will be asked to provide on your form:
- Organizations EIN
- The tax year
- Legal name
- Legal address
- Legal name and address of the principal officer
- Confirmation of tax receipts
Because the form is designed to keep organizations accountable and track their nonprofit status, they also will ask for information like details about accomplishments in the previous year, programs offered, potential conflicts of interest, board member and staff pay, and more.
When Should You File a Form 990?
According to the IRS, your form 990 is due on “the 15th day of the 5th month following the end of the organization’s taxable year”. If you’re operating on the calendar year, you can stick with the 15th of May. If, however, your fiscal year ends on June 30, your form 990 due date is November 15th. Please keep in mind that the due date for this form is different from the due date of other business and personal tax returns.
Do I Need to File State Forms as Well?
Form 990 is a federal tax document that U.S. nonprofits are required to submit, but what state forms should nonprofits look out for? That really depends on the state you are in. You can find the full guide to nonprofit tax forms by the state on the IRS website.
Filing a Form 990 Late
If for some reason, you miss the deadline for e-filing your form 990, the IRS does give you a little grace. You can still file, but there will be penalties and fines imposed unless you can give a reasonable explanation.
That forgiveness only extends so far, though: If you fail to file three years in a row, your tax-exempt status may be taken away.
You can request an extension of the deadline by filing Form 8868, which will give you an additional six months. However, you can only request this for a 990, 990-EZ, and 990-PF—not for the 990-N.
Request Form 990 Filing Assistance From a Raleigh CPA
If you own and operate a nonprofit in Raleigh and need a bit of guidance through the form 990 filing process, our Raleigh CPAs can help. By implementing tax planning and preparation policies into your nonprofit throughout the year, you’ll experience a smooth tax return process at the end of your fiscal year. Fill out the contact form below or give our office a call today at (919) 872-0866 to schedule a consultation.
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