If you want your nonprofit organization to remain tax exempt, then you’re never exempt from filing an IRS tax form 990.
It’s a fact of life for nonprofits. And the larger and more successful your organization becomes, the bigger and more detailed the form gets.
At first this may seem unfair.
Completing the 12-part, behemoth 990 form is a hassle for any financial executive, and more so if you have a lot of moving pieces to manage over the course of a fiscal year.
Yet in reality, filing a 990 is a good thing.
That’s right. We said it.
Filing gives you an official document, verified by the IRS, that donors, foundations, and others can use to better understand your mission and finances. Form 990 gives a nonprofit added credibility and transparency. It lets people know what you’re about, and it lets you show the fruits of your labor.
But let’s face it, this can be a time-consuming and frustrating task.
We know you’re rushing from challenge to challenge with your nonprofit, so we want to help run you through the process of this form.
Let’s look at The Basics of the Form 990 for Executives in a Hurry.
Step 1: Are You Sure You Need to File a Form 990?
You don’t have to file a full 990 form unless your gross receipts reach a certain level.
You’re only required to file the full 990 form if your nonprofit has either:
- $200,000 or more in total gross receipts, or
- total assets of $500,000 or more
You’ll file a shorter form, the 990-EZ, if your organization is reporting less than those amounts, but still more than $50,000 in total gross receipts.
If your total gross receipts are less than $50,000, you’ll be filing a 990-N e-postcard.
All these forms can be submitted to the IRS online.
There are some other exceptions, such as:
- If you’re a private foundation or nonexempt charitable trust, you need to file a 990-PF.
- You may not be required to file if you’re a church-based organization, some government or state organizations, or part of a group return filed by a parent corporation, among other exceptions.
Check out a full list of form 990 IRS exceptions here.
If you don’t have to file a full 990 form, or any 990 at all, you should take advantage of this to avoid the extra resources and time taken away from other crucial tasks.
Step 2: What’s in This Form 990, Anyway?
If you’re filing the full 990, rather than the EZ, e-postcard, or PF, you’re basically giving a rundown of every aspect of your nonprofit, top to bottom.
Some of the main elements of the 990 form include:
- a summary of your nonprofit’s mission, membership, assets, liabilities, contributions and grants, expenses, etc.
- information of major program service accomplishments
- a checklist of required schedules for certain situations that alter the way the IRS views your tax filing, and may require more clarification, like engaging in political campaign activities or receiving or holding a conservation easement
- Schedule A (type of organization) and Schedule B (contributors who give over $5,000) are common schedules for a 501 (c)(3).
- info on governance, management, and disclosure
- compensation paid to officers, directors, employees, etc.
- a full statement of revenue and expenses, balances, reconciliation of net assets, and financial statements and reporting
To say the least, the 990 is a deep dive into every aspect of your nonprofit.
It’s also public record, and mistakes can mean having to refile down the road.
Make sure your financial officers and leadership are on the same page, have all your records cross-checked and ready to go, and file with confidence.
Step 3: File on Time
You must file your form 990 by the 15th day of the 5th month after your accounting period ends.
Whoever files taxes for your nonprofit should keep this holy date. Write it in permanent marker and circle it in red on your calendar.
Trust us: When you’re an executive in a hurry, filing your 990 on time is the best possible solution.
When you file late, or don’t file, it creates headache upon headache. You don’t need or want that when you’re trying to focus on making your mission a success.
Depending on your total gross receipts, you could end up owing up to $50,000 in accruing fines to the IRS for late filing.
After three years of not filing, you’ll lose tax-exempt status.
There’s no appeal process. You’re suddenly stuck paying income taxes and dealing with a ton of paperwork.
Extra time and money aren’t something you’ll want to fork over when you’re on the go, working toward important and challenging goals in your community.
Avoid these setbacks by paying on time.
Prepare early, gathering all the necessary financial paperwork ahead of time so you can file quickly and efficiently and move on.
FINAL STEP: Prepare for Future 990 Filings
Once you file an IRS 990 form, you have a pretty good idea of what to expect for the next taxable cycle.
But don’t get complacent.
The IRS sometimes amends their guidelines, so keep up to date on any changes needed in your approach to tax filing. You may be filing a 990-N this year, but what if your total gross receipts increase substantially? You’ll have to switch to the EZ form or full 990.
What if you expand and grow into new nonprofit chapters? How does that affect who handles your tax forms, and which forms you’ll file?
Consider using an online 990 filing service that can help ease the burden of tax season.
File990 is an industry leader in online filing for forms 990-EZ and 990-N for nonprofits of various sizes. Our Enterprise suite allows you to track tax filing across various chapters and never miss another deadline.
Check out all our 990 filing services.
