If you’re involved in running a nonprofit, you know that filing a 990 form every year is crucial to your success.
It’s important to know the ins and outs of the forms in order to file an accurate and complete return. Furthermore, Having a complete understanding of Form 990 and its impact on your organization can give you an added advantage in staying tax-compliant and in good standing with the IRS.
That’s why we’ve put together this article about Form 990. Here, you can find detailed information about Form 990, its purpose, requirements, deadline, and more.
Table of Contents
Purpose of Form 990
Form 990 is an annual tax-exempt return for organizations exempt from federal taxes. Tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations use Form 990 to report financial information, their program service activities undertaken throughout their tax year, and much more information to the IRS.
This form is very important for organizations to file for many reasons. Primarily, it allows the IRS to make sure the organization is not abusing its tax-exempt status. If an organization has obtained tax-exempt status but isn’t operating under the required guidelines, the IRS will want to know and take action.
Additionally, 990 returns must be made available for public review. Reviewing an organization’s Form 990 allows individuals to gain a sense of the organization’s mission as well as how it allocates its funds towards its cause. This information may also help someone decide whether or not to volunteer or support the organization.
Furthermore, Form 990 may provide the public or any interested party with the organization’s board and other key members’ contact information. This can benefit the organization by expanding its network and reach in the community and by creating new opportunities for people to get involved in the cause.
What are The Different Variants of Form 990?
There are multiple variants of Form 990 that are customized for different organization types and sizes. Organizations must file the appropriate variant for their organization; failing to file the correct variant may result in penalties.
Form 990-N (E-postcard) – Filed by organizations with gross receipts of less than or equal to $50,000.
Form 990-EZ – Filed by organizations with gross receipts less than $200,000 and total assets less than $500,000.
- Form 990 – Filed by organizations that have 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-PF – Filed by private foundations and used to calculate the taxes based on investment income and report charitable distributions.
Form 990-T – Filed by tax-exempt organizations that have a gross income of $1,000 or more from unrelated businesses.
What Information is Required To File Form 990?
In order to file Form 990, you’ll need a variety of information about your organization, both financial and organizational. You should keep all information on hand while filing to reduce confusion and ensure the accuracy of the form. The information you’ll need includes:
(i) Basic organization information, including name, address, and EIN
(ii) Financial information such as revenue, expenses, assets, and liabilities
(iii) Program service accomplishments
(iv) Other IRS filings and tax compliance requirements
(v) Key personnel, governing body, and management details
You may need to report additional information or expand on some information you provided in your form with additional forms called Schedules. Schedules must be attached to your original 990 forms and transmitted to the IRS at the same time. The information you provide in your 990 will indicate whether or not you must file a certain Schedule.
There are 16 different Schedules available to attach, and each one serves a different purpose or type of organization. For example, Schedule H is for hospitals, Schedule M is for noncash contributions, and Schedule O is for in-depth explanations of some of the provided answers on Form 990.
When Should I File Form 990?
Form 990 is due by the 15th day of the 5th month following the end of the organization’s tax year. If this date falls on a weekend or holiday, the deadline will be pushed back to the next business day.
For example, an organization with a calendar tax year from January to December will have a due date of May 15th.
This is the deadline for most 990 forms; however, a few variants may have different deadlines.
For example, employees’ trusts, defined in section 401(a), IRAs (including SEPs and SIMPLEs), Roth IRAs, Coverdell ESAs, or 408(a) (Archer MSAs), that are required to file Form 990-T have a deadline of the 15th day of the 4th month after the organization’s accounting period ends.
Form 990 Penalties
The IRS may impose penalties for a number of reasons. Most commonly, if an organization files a return past its deadline, it will face a late penalty.
If any required information is missing or incorrect, a penalty may also be imposed. Furthermore, if an organization does not file a Form 990 return for three consecutive years, its tax-exempt status will be revoked.
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