Your 990 Made Simple: 5 Tips for Nonprofit Tax Filing

Your 990 Made Simple: 5 Tips for Nonprofit Tax Filing

Tips for Nonprofit Tax Filing

Tax season is upon us!

Filing taxes is no one’s favorite pastime, but it’s necessary for nonprofits to keep their tax-exempt status. When you started your 501(c)(3), you registered to be a tax-exempt organization. Maintaining that status will help your nonprofit save a lot of money in the years to come.

That’s where your IRS Form 990 comes in. For filing IRS Form 990 501(c)(3) organizations need to follow the IRS rules and these 5 tips for success –

  1. Make sure you fill out the right IRS Form 990.
  2. Keep your nonprofit’s records in order.
  3. Double-check your nonprofit’s tax information.
  4. Invest in a 990-specific e-filer.
  5. Don’t be afraid to ask for more time.

These 5 tips (plus some additional tips linked here) will help you get through your nonprofit’s important forms.


Form 990 – 5 Simple Tips for Success


1. Make sure you fill out the right IRS Form 990.

Nonprofit 990 Made Simple 1

While there are some exceptions, such as religious or political groups, the majority of nonprofit organizations fill out an IRS Form 990.

There are three different types of IRS Form 990 that you need to know about. These three forms are the 990-N, 990 EZ, and 990.

Nonprofits qualify to file the 990-N form if…

Your organization’s gross receipts are less than or equal to $50,000.

The Form 990-N is often referred to as the 990 Postcard. This form is incredibly short with only eight questions and it must be filed electronically. The 990-N form differs from regular IRS Form 990s because it’s much shorter and a bit easier to digest.

Nonprofits qualify to file the 990 EZ form if…

Your organization’s gross receipts equal less than $200,000 or you have less than $500,000 in total assets.

The form 990 EZ is only 4 pages long. It’s considered the short-form return and financial penalties for not filing are dependent on your nonprofit.

Nonprofits qualify to file the general IRS Form 990 if…

Your organization’s gross receipts are more than or equal to $200,000 or total assets are more than or equal to $500,000.

The IRS Form 990 is typically filed by older and larger nonprofits. It’s a twelve-page form.

There’s a 4th type of Form 990 as well, that organizations can file on the IRS website – 990-PF. This Form 990-PF is filed annually by private organizations.


2. Keep your nonprofit’s records in order.

Nonprofit 990 made simple 2

Keeping all of your information in order is vital to any type of tax preparation –

  • Legal name
  • Tax year
  • Employer Identification Number (EIN)
  • Gross receipts
  • Website

Unlike personal tax records, your nonprofit’s IRS Form 990 is public information, meaning anyone can access it. You could search through old records for every fiscal year or you could print out these records to keep for yourself.

An easier way to track your 990 records is to use filing software. This software will pull information about your organization from the IRS database based on your EIN, then save your tax information for future filing.

Your donors might want to see your budgeting and annual fund information before they decide to donate to your nonprofit. Talk to your annual fundraising consultant about the best ways to present this information. They’ll likely suggest including more details in your annual report. That way, your donors won’t have to search for your IRS Form 990.

Bonus! Make sure your donors’ tax receipts are also organized so that you can look through your records to also feature some of your most prominent donors in your annual report.


3. Double-check your nonprofit’s tax information.

Tips for Nonprofit Tax Filing 3

With Form 990 501c3 organizations must follow the necessary regulations. Or else, they’ll receive a rejection of the application and be asked to resubmit the form.

You can check the information you file against the metrics recorded in your nonprofit’s donor database. However, be sure to not include any identifying information such as social security numbers or home addresses because the forms are public documents.

Don’t lose your 990 status or file late due to complications with your forms.


4. Invest in a 990-specific e-filer.

Tips for Nonprofit Tax Filing 4

One of the easiest ways to file on time, use the right form, and check your work is to file your IRS Form 990 with an IRS-authorized e-filer.

With software like File 990, you’ll never forget to file because after your first filing the software will send a reminder when it’s time to file again.

When you first file Form 990, all you need to do is submit your nonprofit’s EIN. The software will pull relevant tax information directly from the IRS database. Then, you’ll answer a series of questions about your nonprofit and it will automatically fill out the necessary components of the form.

With an authorized e-filer, your nonprofit can:

  • Track component filing
  • Feel secure about filing

Tax e-filing software will also save your nonprofit’s information so that filing is easier for the years to come. It takes away the hassle of searching for your last fiscal year’s information.


5. Don’t be afraid to ask for more time.

Nonprofit 990 5

If you forget to file your IRS Form 990 for 3 consecutive years, your nonprofit will lose its tax-exempt status.

Your IRS Form 990 is due by one of two deadlines:

  1. May 15. Your nonprofit will have this deadline if your organization follows the Calendar Tax Year.
  2. 15th day of the 5th month after the month that concludes your fiscal year.

There are some hefty penalties for those who are late to file their IRS Form 990.

If your organization has a gross receipt of less than $1,000,000 for the fiscal year, you could see penalties such as:

  • A $20 per day penalty for every day that the return is late.
  • A maximum penalty of $10,000 or 5% of the organization’s gross receipts (whichever is less).

If your organization makes over $1,000,000 in gross receipts, your penalty for late filing is $100 per day with a maximum charge of $50,000.

Your nonprofit can always file a Form 8688 and have your deadline extended by six months.


Conclusion

Filing your Form 990 requires you to understand the IRS rules, keep track of records, and use expert support or a tool. With these 5 tips, you’re ready to take on your 990 and the tax season. You can save your nonprofit money by maintaining your tax-exempt status while saving time by finding the easiest way to file.


This is a guest post by David Ebner, VP – Marketing
Creativity flows through David Ebner’s veins like coffee from an espresso machine. David’s outgoing personality, blog knowledge, remarkable marketing schemes and caffeine stimulation put OmegaFi over the top in the marketing world. David is a native of Barberton, OH and currently lives in Tampa, FL. He received his B.A. in English from the University of South Florida and MFA in Creative Writing from the University of Tampa. David is an alumnus of Chi Phi and joined this excellent group of men in 2007. He continues to be active with his fraternity and brothers as well as with the National Office where he held the office of Senior Field Executive during 2010 – 2013.
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