Associations, faith-based organizations, social services organizations, private foundations, private schools and other nonprofit organizations need a tax partner with extensive experience with tax-exempt organizations. Our dedicated team of nonprofit tax experts understand that your Form 990 is more than just a tax return; it is an overview of your financials, and it outlines your mission and the achievements you’ve made throughout the year.
Services We Offer to Nonprofit Organizations
- Review and compile your financial statements
- Design, install, and maintain your accounting system
- Provide training for your accounting personnel
- Provide training for your Board on nonprofit financial statement usage and effective budgeting practices
- Prepare and file the Form 990 tax return
Nonprofit Tax Returns
Most nonprofit tax-exempt organizations are required to file annual tax returns with the IRS. Even though most tax-exempt nonprofit organizations do not pay federal taxes (that is what “tax-exempt” means), most do have to file an informational return with the IRS. This annual reporting return is called a Form 990.
What is the IRS Form 990?
The IRS Form 990 is the reporting form that many federally tax-exempt organizations must file with the IRS each year. This form allows the IRS and the general public to evaluate a nonprofit’s operations; it includes information on the nonprofit’s mission, programs, and finances.
The type of Form 990 to be filed by an organization depends on the filing year and the gross receipts of the organization. The different forms include Forms 990, 990-EZ and 990-N.
The Form 990 and its related schedules include the following items:
- Income Statement with very specific revenue and expense categories like donations, salaries, postage, rent, etc.
- Balance Sheet with specific categories like cash, accounts receivable, and accounts payable.
- Functional Expense Statement with all the expenses allocated to either program services, fundraising, or operations.
- Individual Program Expense Statement that reports all of the expenses for each program or service such as seminars or educational mailings.
- Revenue Support Schedules that detail the organization’s sources of income in specific categories like charitable donations, membership fees, and investment income.
The IRS uses these revenue and expense classifications to determine if your organization will retain its tax-exempt status, so it’s imperative that you build your accounting system around these classifications.
Who Files the IRS Form 990? Which Form 990 Do We File?
Most federally tax-exempt organizations (with some exceptions like churches and state institutions) file a 990. All 501(c)(3) private foundations file a 990.
The IRS provides information to help you determine which form to file.
- Larger nonprofits with gross receipts of more than $50,000 file Form 990 or 990-EZ
- Smaller nonprofits with gross receipts of less than $50,000 file Form 990-N (e-Postcard)
- Private foundations file Form 990-PF
- Find more information on which forms to file.
What Nonprofits Are Exempt from Filing IRS Form 990s?
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.
It is important to check with the IRS to determine if your organization needs to file a return.
When Is the IRS Form 990 Due?
Your organization’s Form 990 is due on the 15th day of the 5th month after the end of the organization’s taxable year. This means that if your organization follows the calendar year (January 1 – December 31), your Form 990 would be due on May 15th of each year.
What Happens if Our Nonprofit Does not File IRS Form 990?
If an organization fails to file Form 990 three years in a row, the IRS will automatically revoke its tax-exempt status. Since 2011, more than 500,000 nonprofits across the country automatically lost their tax-exempt status for this reason.
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. Additionally, you can avoid paying user fees and filing additional documents with the IRS by submitting your Form 990 each and every year.
Can IRS Form 990 Be Seen by the Public?
Yes. Nonprofit organizations are required to make their IRS Form 990 and their exemption application available for public inspection during regular business hours.
Many nonprofits make 990s available for viewing on their websites. You can also view them at Guidestar, an organization that compiles information about nonprofits.
Contact us today for more information about tax return filing for your nonprofit organization.