Filing Form 990
First the good news, today, April 15th is probably NOT tax return filing day for your nonprofit organization. Although a tax exempt organization is, as the name suggests, exempt from paying taxes, most nonprofits are still required to file an annual informational return (Form 990).
This form generally must be filed electronically.
If you want to see what Form 990 and the instructions look like, check them out here.
What happens if our nonprofit does not file IRS Form 990?
If an organization that is required to file, fails to file Form 990 for three years in a row, the IRS will automatically revoke its tax-exempt status.
The IRS has no appeal process for automatic revocations due to failure to file an appropriate Form 990 for three years. Without this status, your organization could be subject to paying income taxes. You can avoid paying user fees and filing additional documents with the IRS by submitting your Form 990 each and every year.
Due Date
Form 990 is due on the fifteenth day of the fifth month following the end of the organization’s taxable year. So if your organization is on a calendar year that ends on December 31, 2023 the due date for Form 990 is May 15, 2024. Need more time? You can request a six-month extension by filing Form 8868.
Flavors of Form 990
The IRS Form 990 is the reporting form that many federally tax-exempt organizations must file with the IRS each year. There are different versions of Form 990. The type of Form 990 that an organization may file depends on the filing year and the gross receipts of the organization. Here’s a helpful IRS Chart.
The different forms include Forms 990, Form 990-EZ for smaller nonprofits, the Form 990-PF for private foundations or non-exempt charitable trusts treated as private foundations, and Form 990-N also known as the “postcard”.
The IRS can help you determine which form to file here.
Form 990
Form 990 must be filed by an organization exempt from income tax under section 501(a) (including an organization that hasn't applied for recognition of exemption) if it has either:
gross receipts greater than or equal to $200,000, or
total assets greater than or equal to $500,000 at the end of the tax year.
Form 990-EZ
If an organization has gross receipts of less than $200,000 and total assets at the end of the tax year totaling less than $500,000, it can choose to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, instead of Form 990.
Form 990-N (Notice or Postcard)
If an organization normally has gross receipts of $50,000 or less, it must still submit Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or 990-EZ, if it chooses not to file Form 990 or 990-EZ.
There are exceptions for certain section 509(a)(3) supporting organizations and for certain organizations listed below that do not have to file annual returns.
Don’t Have to File?
Not all nonprofits have to file annual returns. Generally, the following do not have to file Form 990:
Most faith-based organizations, religious schools, missions or missionary organizations
Subsidiaries of other nonprofits – those that may be covered under a group return filed by the parent organization
Many government corporations
State institutions that provide essential services.
Check with your accountant and/or the IRS to determine if your organization is required to file a return.
$50,000 Gross Receipts Test
To determine whether an organization's gross receipts are normally $50,000 or less, apply the following test. An organization's gross receipts are considered to be normally $50,000 or less if the organization is:
Up to a year old and has received, or donors have pledged to give, $75,000 or less during its first tax year;
Between 1 and 3 years old and averaged $60,000 or less in gross receipts during each of its first 2 tax years; or
Three years old or more and averaged $50,000 or less in gross receipts for the immediately preceding 3 tax years (including the year for which the return would be filed).
Filing Form 990 When You Don’t Have To
Form 990 allows the IRS and the general public to evaluate a nonprofit’s operations; it includes information on the nonprofit’s mission, programs, and finances.
This is why you will sometimes hear that you should file Form 990 or Form 990-EZ even if you are not required to do so. If an organization eligible to submit the Form 990-N or file the Form 990-EZ chooses to file the Form 990, it must file a complete return.
Some organizations publish their Form 990 directly on their website. This is a public document and is available for viewing through Guidestar.
The information that you provide on these forms can be used by websites like Charity Navigator to provide information to the public and may be required by grant making organizations.
Good Luck!
This is a very basic overview, and is NOT legal or tax advice.
The best advice I can offer you is to make sure you have a good accountant as part of your team and that you are tracking your income and expenses using Quickbooks or something similar. If you haven’t already heard, Techsoup is the way to go for your organization’s software needs! It’s deeply discounted for nonprofits and remember, if the software you want is out of stock, try again later, they do add more inventory.
