The Form 990 series is a specifically designed tax form that most tax-exempt organizations will need to file annually. Though tax-exempt organizations do not pay federal income tax, they still must report their financial details, activities, contributions received, and certain other information to the IRS every year–and this is where Form 990 comes in.
My Organization is Tax-Exempt. Why Do I Need to File a 990 Form?
Even after obtaining tax-exempt status, your nonprofit organization still must file annual tax returns, i.e., a 990 series form.
Beyond the fact that it’s a requirement, there are a number of additional benefits to filing a Form 990 series return. Some of the additional benefits include:
- Access to grants specifically designated for tax-exempt organizations.
- Possibly avoiding state and local sales/property taxes.
- Tax-deductible classification for your donations.
- Increased credibility in the eyes of donors and the community.
That last point is especially important–previous donors want to know their money went towards something meaningful, and new donors need to believe they’re contributing to something that will make a difference. Being transparent and forthcoming with your financial details assures everyone in the community that you are committed to doing good–and that means more support for your organization.
What Information Will I Need for Filing?
Before getting started with the filing process, you’ll want to ensure that you have all the information you need to file accurately–incorrect returns can result in penalties from the IRS.
The information you’ll need includes,
- Revenue, expenses, assets, liabilities, etc.
- Activities carried out by the organization.
- Program service accomplishment details.
- Any other IRS filings and tax compliance requirements
- Details of key personnel, governing body, and management.
What Form Should I File?
Depending on your organization’s gross receipts and assets, you’ll file the corresponding form from below:
- Form 990-N (e-Postcard): Filed by organizations with gross receiptsof $50,000 or less.
Organizations eligible for Form 990-N can e-file Form 990-EZ or Form 990 instead if they choose.
- Form 990-EZ: Filed by organizations with gross receipts greater than $50,000 but less than $200,000 (and)total assets less than $500,000.
- Form 990: Filed by organizations with gross receipts greater than or equal to $200,000 (or) total assets greater than or equal to $500,000.
- Form 990-PF: Filed by private foundations (as well as non-exempt Charitable Trusts, which the IRS treats as private foundations).
Depending on the situation, your organization may choose or be required to file:
- Form 990-T: Filed by organizations that file Form 990-PF, 990-EZ, or 990 that also have an unrelated business income of $1000 or more during the tax year.
- Form 8868: Filed by organizations that require an automatic 6-month extension to file their annual tax returns.
A Note on Schedules:
In addition to Form 990, tax-exempt organizations may be required to provide more information about what they reported. This is done through a number of disclosure and compliance requirements called schedules.
Generally, you only need to do the schedules that correspond to relevant information on your Form 990; some organizations, however, may consider filing certain schedules even if not required to:
- Schedule A: Public Charity Status and Public Support
- Schedule B: Schedule of Contributors
- Schedule C: Political Campaign and Lobbying Activities
- Schedule J:Compensation Information
- Schedule K: Supplemental Information on Tax-Exempt Bonds
- Schedule D: Supplemental Financial Statements
- Schedule E: Schools
- Schedule F: Statement of Activities Outside the United States
- Schedule G : Supplemental Information Regarding Fundraising or Gaming Activities
- Schedule H:Hospitals
- Schedule I: Grants and Other Assistance to Organizations, Governments, and Individuals in the United States
- Schedule L: Transactions with Interested Persons
- Schedule M: Noncash Contributions
- Schedule N: Liquidation, Termination, Dissolution, or Significant Disposition of Assets
- Schedule O: Supplemental Information to Form 990
- Schedule R: Related Organizations and Unrelated Partnerships
When is the Deadline to File a Form 990 Series?
The deadline for tax-exempt organizations to file a Form 990 series is the 15th day of the 5th month following the end of their accounting period. For example, organizations following the calendar year will have a deadline of May 15th.
If your organization operates on a fiscal year, use the table below to determine your Form 990 deadline:
|Accounting Period Begins||Accounting Period Ends||Deadline to file 990 type forms|
|January 1st||December 31st||May 15th|
|February 1st||January 31st||June 15th|
|March 1st||February 28th||July 15th|
|April 1st||March 31st||August 15th|
|May 1st||April 30th||September 15th|
|June 1st||May 31st||October 15th|
|July 1st||June 30th||November 15th|
|August 1st||July 31st||December 15th|
|September 1st||August 31st||January 15th|
|October 1st||September 30th||February 15th|
|November 1st||October 31st||March 15th|
|December 1st||November 30th||April 15th|
If you need more time to file, don’t forget that’s what Form 8868 is for–use it to get a 6-month extension on filing your Form 990.
What are the Potential Penalties for Filing Late/Not Filing?
Potential penalties your organization may face if you file late are as follows:
- For Form 990, Form 990-EZ, and 990-PF Filers:
- Organizations with gross receipts less than $1,129,000 that file after the deadline (including extensions) and without reasonable cause will be charged $20 per day for each day the return is late, up to $11,000 or 5% of the organization’s gross receipts.
- Organizations with gross receipts greater than $1,129,000 are subject to a $110 fine for each day their Form 990 is late, up to $56,000 or 5% of gross receipts.
- There are no late filing penalties for Form 990-N.
For organizations that must also file a Form 990-T, filing late may mean facing a penalty of 5% of the unpaid tax for each delayed month or part of a month; the minimum penalty for a Form 990-T filed more than 60 days after the deadline is the tax due or $435 (whichever is smaller), and the maximum penalty is 25% of the unpaid tax.
An organization that does not file a Form 990 for three consecutive years will likely have its tax-exempt status automatically revoked.
The IRS Now Mandates e-Filing–Find the Right e-Filing Software for Your Nonprofit!
The Taxpayer First Act, enacted July 1, 2019, mandates that all tax-exempt organizations electronically file form 990 Series and related forms. Because of this, it’s more important than ever to make sure that you find the right e-filing service for your nonprofit organization!
Authorized IRS e-file providers make the filing process simple and more friendly for every taxpayer with step-by-step instructions and the necessary schedules generated based on the information you provide.
Take your time to do the proper research on what form you’ll need to file, what information you’ll need, and what e-filing service works best for your nonprofit.
For more information on all things 990 Forms, visit Tax990 today!