An Ultimate Guide to the 990-N Postcard for Small Nonprofits
May 17, 2023 | 0 Comments
Your small nonprofit’s tax-exempt status is one of the biggest advantages it has to maximize fundraising revenue, but maintaining it can be a struggle even for the most seasoned professionals. These tax forms can be time-consuming and put undue stress on small nonprofits that are trying to focus their efforts on fundraising.
But it doesn’t have to be this way. Your small nonprofit has the unique ability to free up bandwidth by filing the Form 990-N Postcard, a streamlined version of Form 990. With the right preparation and software, your small nonprofit can file your tax forms effortlessly. In fact, you won’t even need to close your laptop or spend significant dollars to get started. We’ll cover the following topics:
- Form 990-N Postcard FAQs
- Best Practices for Filing the 990-N Postcard
- How File 990 Can Support Your Nonprofit
Let’s explore the nuances of the Form 990-N postcard and position your small nonprofit for success.
Form 990-N Postcard FAQs
You likely have many questions about Form 990’s complexities. Here are answers to some frequently asked questions about the Form 990-N postcard.
What is the IRS Form 990-N?
The Form 990-N postcard is a tax form designed for small 501(c)(3) organizations to file for their tax-exempt status with the government. Form 990-N differs from other nonprofit tax forms because:
- Filers must have less than $50,000 in gross annual receipts for the fiscal year to qualify
- It’s entirely electronic and doesn’t require special software
- Less information is required to fill it out
Who can and cannot file the IRS 990-N?
Use this decision tree to determine if you’re eligible for Form 990-N:
Though your nonprofit’s size and gross receipts are the most significant indicator of your Form 990-N eligibility, there are other factors that can determine your eligibility. Your organization cannot file Form 990-N if it is a:
- 501(c)(1) organization, such as the Federal Reserve System
- 527 organization, such as a political action committee
- 509(a)(3) organization that support a specific cause, like a cancer research center
- 501(c)(20) organization, such as Legal Aid
- 501(c)(23) organization, such as the Marine Corps Heritage Foundation
- 501(c)(24) fund or account, like a 401(k) plan
- 501(d) – Religious and apostolic organizations, such as a monastery
- 529 – Qualified tuition programs, like a tax-free college savings plan
- 4947(a)(2) – Split-interest trusts, such as a charitable remainder trust
- 4947(a)(1) – Charitable trusts that act like private foundations, like the Bill and Melinda Gates Foundation
If you find your organization checking off any one of these boxes, then you’ll be filing the IRS 990 or 990-EZ.
When is the filing date for the 990-N postcard?
Form 990-N is due every year by the 15th day of the fifth month after the close of your tax year. For example, if your fiscal year ended in January of 2023, your due date for your IRS Form 990-N would be June 15th, 2023.
What happens if my filing is late?
First, the IRS will send you a reminder notice to the last address they have on file for your organization. Although there is no penalty assessed for filing Form 990-N late, if you fail to file anything for three consecutive years, you will automatically lose your organization’s tax-exempt status. This means you’ll have to reapply to be reinstated. This revocation of your organization’s tax-exempt status will occur on the filing due date of your third consecutively-missed year.
What do I need to file the 990-N postcard?
Thankfully, Form 990-N is pretty simple. All you need are these eight pieces of key information:
- Employer identification number (EIN), also known as a Taxpayer Identification Number (TIN)
- Tax year
- Legal name and mailing address
- Any other names the organization uses
- Name and address of a principal officer
- Web site address if the organization has one
- Confirmation that the organization’s annual gross receipts are $50,000 or less
- If applicable, a statement that the organization has terminated or is terminating (going out of business)
What happens if I’m having trouble filing?
If you’re still having trouble after following these instructions from the IRS, you can try:
- Calling the IRS Customer Account Services at 877-829-5500 (toll-free)
- Closing multiple browsers when registering
- Using a desktop or a laptop to file instead of a smartphone
- Double-checking you’re correct text characters when registering and filing
- Checking your spam/junk email folders for necessary IRS correspondence
- Using a non-networked computer
- Logging out and restarting your computer
If you get the error message that your EIN is wrong when you typed it in, your organization may not be listed as a tax-exempt organization. If that’s the case, contact Customer Account Services and ask for your organization to be set up to allow the filing of Form 990-N.
Then, give the IRS at least six weeks to update their records before filing. There are no late penalties so you can file at any time, but be sure you do it in a reasonable timeframe or you’ll risk getting your tax-exempt status revoked.
How do I file?
Once you have your financial documents in order, you can file the IRS 990-N here. To complete the forms, you can either try to fill it out yourself or use an external accountant.
However, filing such a high-stakes document without the help of software leaves you susceptible to human error. Plus, even the most seasoned accountants can make these mistakes and can charge a hefty fee that many small nonprofits can’t afford. That’s why we recommend using File 990 to file your 990-N postcard.
Why use File 990?
The biggest problem nonprofits face, regardless of size, is the sheer amount of work they have to do just to keep their mission moving. As a result, deadlines, communication, record-keeping, and maintaining an accurate organizational structure go out the window when times get tough or busy.
File 990’s intuitive interface streamlines the filing process, allowing small nonprofits to navigate the complicated process with ease and focus on scaling up their organization. Plus, it’s only $55 to file a 990-N postcard, which is a fraction of many accountants’ hefty fees.
Best Practices for Filing the 990-N Postcard
Now that you understand the components of Form 990-N, it’s time to get filing! Here are the most important steps you should take to jumpstart the process:
Determine your filing deadline based on the end of your fiscal year.
Double-check your filing deadline and proactively organize your financial information leading up to it. Ideally, you’ll file your 990-N postcard as early as possible (right after your tax year ends). This gives you plenty of time to catch any errors and avoid scrambling right before the deadline.
Maintain data hygiene for your financial records.
The good part about running a small nonprofit organization is that you don’t have to be a tax accountant to succeed. There are small steps that can help you maintain data hygiene throughout the year that will make a big difference at tax time, such as:
- Tracking all donors and donations with a CRM
- Ending every month with an accounting of revenues and expenditures
- Using e-filing software that saves your contact information in your profile, such as your EIN
Also, don’t forget to regularly update your financial policies and procedures over time. Not only will new financial management solutions become available, but also your nonprofit will also grow and change as well. For instance, you might consider upgrading your budgeting software as your nonprofit collects more donations and scales up its activities. Continuously improving your financial management strategies is what will help your nonprofit stand the test of time and keep your tax-exempt status.
Use a tax-filing software solution for small nonprofits to help you.
While there are many e-filing solutions available, the best option for a small nonprofit is one that’s catered to their specific needs, such as File 990.
As an authorized e-file provider, File990 is the fastest, safest, easiest, way to file nonprofit taxes–including your electronic postcard. We use bank-level security to ensure all your information is kept safe. We’ll not only remind you when it’s time to file, but we’ll also save all your prior year’s information to make it even simpler. Simply put, we do the heavy lifting for you. Just provide a few details about your organization and we’ll do the rest!
Ask for help when you need it.
There’s no doubt that filing tax forms is one of the most challenging parts of nonprofit governance. Ensure that you have a support system in place that you can use for assistance, such as your nonprofit colleagues or a contact at the IRS.
Additionally, choose a software solution that includes technical support. For example, File 990 has a website page dedicated to troubleshooting, complete with a live chat feature on the homepage to help you get through tax season.
How File 990 Can Support Your Nonprofit
As you grow your small nonprofit, you’ve got the weight of the organization on your shoulders. By delegating your tax preparation to a partner like File 990, you can focus your time and efforts on what you do best: helping your beneficiaries. All you need to do is keep accurate receipts and mind your monthly bookkeeping to set you up for success. Then, when it comes time to file, File 990 will do the rest!
Running a small nonprofit can be intimidating, but don’t allow the fear of tax preparation to hold you back. With the right practices and software, you can grow your organization into a force for good that stands the test of time.
- 990-N vs 990-EZ: What’s the Difference? There are many different types of nonprofit tax forms to be aware of. Learn the difference between two of the most common forms in this guide.
- 990-EZ for Nonprofits | Everything You Need to Know to File. Once you know the nuances of Form 990-EZ, it’s time to get filing! Get everything you need from this article.
- The IRS Form 990 EZ Deadline & What Happens When You Miss It. Staying on top of IRS deadlines is crucial for maintaining your tax-exempt status. Learn how to stay organized with this guide.