It’s That Time of Year. How’s Your 990 Coming Along?

Just in case you were wondering about why most people hate tax season, a new poll from Pew Research Center spells it out. And even if you work at a nonprofit, you still have to file personal taxes. The organization, however, most likely doesn’t. Nonprofit organizations are, by definition, tax-exempt from paying federal taxes. They don’t get off the hook however. An annual report to the IRS, known as the Form 990, is still a must for most.

The Form 990 is a report designed to provide the government and the public a clear understanding of a charitable organizations activities each year. If the organization fails to file, it runs the risk of being penalized by the IRS. According to a report from the Urban Institute, about 35 percent of the 1.41 million nonprofits registered with the IRS are required to file some version of the form 990.

A great place to start and make sure that your organization is compliant with the IRS is its website. Visit the IRS’ Charities and Nonprofits Annual Reporting and Filing page to find answers to some of the basic questions.

Guidestar also offers a handy and easy- to-read review, Highlights of IRS Form 990 which includes illustrations and notes on fields throughout the form. Form 990 Know-How: Your Stress-Free Filing Guide is available from the Nonprofit Hub.

Which form is appropriate for your organization? The Form 990, Form 990-EZ, or Form 990-PF?

Here is a good rule of thumb, but always check with your tax professional to be certain.

  • More than $50,000 in gross receipts: Form 990 or 990-EZ
  • Less than $50,000 in gross receipts: Form 990-N
  • Private foundations Form 990-PF

Generally, these groups do not have to file a Form 990:

  • Faith-based organizations, schools, missions, etc.
  • Subsidiaries of other nonprofits
  • Government corporations
  • State institutions providing essential services

When is the IRS Form 990 due?

Although it’s easier to remember April 15 as Tax Day, this isn’t the day to remember for nonprofit filing. The 990 is due on the 15th day of the 5th month after the end of the organization’s taxable year. If your organization follows the calendar year, the 990 form is due on May 15. If the organization’s taxable year ends on June 30, the 990 is due on November 15.

Just in case you need more inspiration for filing than the IRS, Michael Sol shares the strategic importance of the return in a paper written for the American Bar Association. He points out the 5 benefits to filing the Form 990:

  1. Maintains compliance with the IRS (always #1)
  2. Standardizes bookkeeping and reporting
  3. Demonstrates fiscal responsibility
  4. Curbs charity fraud through transparency
  5. Demonstrates accountability to potential donors and employees

Although some organizations prepare their 990s internally, most nonprofits hire a professional tax firm for assistance. An increasing number of organizations are using temp and interim financial experts from experienced nonprofit staffing firms.

A parting note—check out this article from Foundation Group, Legal Liability for Nonprofit Board Members, and Best Practices for Exempt Organizations and Form 990, from the Journal of Accountancy. Both provide governance advice that is wise to heed.

Add to Today’s Tasks: When is your 990 deadline?

Amy DeVita is a publisher, entrepreneur, mother, wife, social media enthusiast and fan and avid supporter of the nonprofit/ for-impact sector. She has written for Top Nonprofits and Third Sector Today; she has been quoted on pieces about social media and social impact on The Huffington Post and The Daily Beast. She was named to the Leading Women Entrepreneurs in NJ Monthly and she is a member of Social Media for Nonprofits’ Leadership Council. In her spare time she enjoys kayaking, yoga, hiking, traveling, and playing Scrabble. Amy lives in New Jersey with her husband, two children, and two dogs. In 1984 she earned the “Most Improved Average” honor on her bowling league.

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