Nonprofits With Tax Returns: What Are IRS Form 990 and Form 990-EZ Used For?

There's no profit in not turning in your Form 990s!

When it comes to keeping your organization's tax-exempt status in good standing, IRS Form 990 and Form 990-EZ are important tools for reporting financial information.

Form 990 is a comprehensive annual information return for tax-exempt organizations while Form 990-EZ is a shorter version for smaller organizations that meet certain eligibility requirements. They look like a corporate tax return, but because they list so much information such as program service accomplishments, they can be much longer. These annual tax forms are crucial for providing the IRS and the public with an overview of your nonprofit's mission, programs, and finances.

Nonprofits need to include key information such as revenue, expenses, assets, and liabilities when completing these tax forms, along with details about their governance and activities. Filing Form 990 or Form 990-EZ on time is essential for maintaining your organization's tax-exempt status and ensuring transparency with donors and stakeholders.

So, remember to keep these tax forms on your radar and make sure to dot your i's and cross your t's when it comes to reporting your private foundation's financial information and revenue sources.

It's all part of keeping your nonprofit on the right track!

The Forms for Tax Returns for Organizations Exempt from Income

Annual tax forms for organizations exempt from income tax, such as non-profit organizations, include Form 990-EZ. This form is required to be filed by tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations. In certain cases, organizations may be exempt from filing Form 990, such as faith-based organizations, state institutions, and subsidiaries covered under a group return.

Additionally, these organizations may need to file employment tax forms, like Form 941, which is used to report withheld federal income tax, social security tax, and Medicare tax from employees' wages. It's important to stay up to date with the specific requirements for tax-exempt organizations to ensure compliance. Stay informed about any exemptions and other relevant forms that may apply to your organization.

Don't let the tax form filing process overwhelm you. Keep in mind the exemptions available for certain organizations, and familiarize yourself with the necessary employment tax forms.

When it comes to Form 990, it's all about sharing the right information with the IRS to stay on top of your nonprofit's filing requirements. The form includes details like revenue and expenses, program service accomplishments, compensation of key employees, and governance structure.

Basically, Form 990 is the way you let the IRS know what your nonprofit is up to and how you're using your resources to benefit the community. This helps the IRS keep tabs on the finances and activities of nonprofit organizations, ensuring transparency and accountability.

So, the next time you're filling out Form 990, just keep in mind that it's all about sharing the necessary info with the IRS to show them that your nonprofit is doing everything by the book. It's just one of those administrative tasks that keeps everything running smoothly and in compliance with the law. Keep up the great work, and keep those forms filed on time!

What Are the Schedules for Form 990?

If you're managing a nonprofit organization and filling out Form 990 or Form 990-EZ for tax-exempt status, you'll need to be aware of the available schedules to complete your filing. For Form 990, there are 16 schedules: A, B, C, D, E, F, G, L, M, N, O, R, and S through V. Each of these schedules serves a specific purpose, such as reporting compensation, political campaign and lobbying activities, and supplemental financial details.

If you're filing Form 990-EZ, there are 8 schedules: A, B, C, E, G, L, N, and O. These schedules cover similar topics as Form 990, but in a more streamlined way to accommodate smaller organizations.

The most common schedules include

• Schedule E - Schools is used by schools to report their income from any endowment funds, annuities, real estate, royalties, or trusts. It's also used to report expenses related to these activities. This form should be completed if the school received more than $5,000 in unrelated business income.

• Schedule G - Supplemental Information Schedule G is an attachment to Form 990-EZ that asks organizations to provide additional information about their fundraising and/or gaming activities. It is important for organizations to accurately report this information, as it can help determine a charity’s eligibility for grants or other sources of funding. The schedule allows the organization to provide details on its fundraising activities, such as how much money was raised as a revenue source on their balance sheet and to list any potential donors.

• Schedule L - Transactions is used to report certain transactions between the tax-exempt organization and interested persons. An interested person is someone who has an ownership interest in, or some other close relationship with, the organization, such as a board member or key employee. Schedule L requires organizations to disclose details of any loans made to or from interested persons.

• Schedule N - Liquidation is used to report information about a charitable organization's liquidation, dissolution, termination, or substantial contraction. This schedule should be completed if an organization ceases operations and has assets to be distributed.

What's the Difference Between Form 990 and Form 990-EZ?

If you're a nonprofit organization, then you already know the importance of filing your annual tax return using Form 990 or Form 990-EZ. But do you know the difference between the two? Let's break it down for you.

First off, the filing requirements for Form 990-EZ are less stringent than for Form 990, which is an eight-page form. Organizations with gross receipts less than $200,000 and total assets less than $500,000 can file Form 990-EZ while those with higher numbers must file Form 990. Small community-based nonprofits or local associations may qualify for Form 990-EZ while larger, more complex organizations with higher revenue and assets would typically file Form 990. That said, the lowest threshold version is still a four-page form and not quite as EZ to fill out.

Additionally, Form 990-EZ has fewer reporting and disclosure requirements compared to Form 990. However, both forms are important for nonprofits to accurately report their financial information to the IRS and the public.

Which Organizations Qualify to Use the 990-EZ Form?

If you're wondering whether your tax-exempt organization qualifies to use the 990-EZ form, here's the lowdown.

Typically, organizations with gross receipts of less than $200,000 and total assets less than $500,000 for the tax year can use the 990-EZ form. This applies to a range of tax-exempt organizations including charitable, religious, educational, scientific, literary, and certain other types of organizations.

In some cases, filing requirements may also necessitate the attachment of certain schedules such as Schedule A for public charities, Schedule B for Schedule of Contributors, or Schedule N for liquidation, termination, dissolution, or substantial contraction.

So, if your organization fits the bill with gross receipts and total assets within the specified criteria, the 990-EZ form might just be the right form for you. But as always, it's best to consult with a tax professional to make sure you're on the right track.

Deadlines for Form 990

You must turn the form in before the 15th day of the 5th month after your accounting period's over. Does your organization follow the calendar tax year? Well, then you'll have to turn your Form 990 or Form 990-EZ in before May 15. If your organization has a tax period ending other than December 31, it's important to know the deadlines for filing Form 990 or Form 990-EZ. For organizations with a tax period ending on June 30, for example, the due date for Form 990 is November 15. If your accounting period follows a different schedule, the deadlines will vary accordingly.

To find the specific deadlines for your organization's Form 990 or Form 990-EZ, you can check out the IRS website or consult with a tax professional. They'll be able to help you determine the exact due dates based on your organization's tax period and accounting period.

Stay on top of your filing deadlines to avoid any penalties or fines. Remember, staying informed and proactive is the key to staying compliant with your tax obligations.

Any Penalties for Late Filing Form 990

So, you know that filing Form 990 on time is super important for nonprofits, right? Well, if you miss the deadline, you could be facing some hefty penalties. The penalties for late filing Form 990 vary based on your organization's gross receipts and can range from $20 to $100 per day, with a maximum penalty of $50,000.

If you don't file Form 990 on time, it can result in fines and penalties for your nonprofit. And trust me, you don't want to deal with that headache. Missing the deadline can also lead to your organization losing its tax-exempt status, which is a big deal. Consider sending your form via email or looking for a way to e-file IRS form 990 and 990-EZ.

Sources

"Understanding IRS Form 990, including the different 990 form types." by BryteBridge Nonprofit Solutions