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. Nonprofit finance professionals spend hours of their precious time pouring over these forms. But when you’re armed with the best tips for success, you can speed up this process and file your annual IRS Form 990 more efficiently.

Here are some of our favorite 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.

Don’t let tax season drag on and on. These tips (plus some additional tips linked here) will help you get through your nonprofit’s important forms. Ready to learn more? Let’s get started!

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

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, 990EZ, and 990. The first step to a successful tax season is filling out the right form.

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 990EZ form if…

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

The form 990EZ 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 that these organizations fill out annually.

We conveniently forgot to mention the fourth type of IRS Form 990 in our first paragraph of this section because it likely won’t apply to your organization.

The 990-PF is filed annually by private organizations.

If you want to learn more about the different IRS Form 990s and software to help you file them, check out this article by re:Charity about form 990 software.

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2. Keep your nonprofit’s records in order.

Keeping all of your information in order is vital to any type of tax preparation. To get started, you’ll need access to data such as your organization’s:

  • 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 year after year looking for your past filed information, or you could print out these records to keep for yourself.

An easier way to track your 990 records is to use a 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.

Because your tax information is available to the public, you should always be prepared for the public to look at it. 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 without forcing donors to search through records.

They’ll likely suggest including more details in your annual report. This helps your supporters better understand your nonprofit so they don’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.

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3. Double check your nonprofit’s tax information.

If your IRS Form 990 doesn’t comply with the necessary regulations, you’ll receive a rejection of your application and be asked to resubmit the form.

That’s why it’s incredibly important to check your work before you turn in your tax information.

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.

Changes in the tax system are estimated to result in a drastic drop of charitable giving in the years to come. This means it’s more important than ever for you to keep as much of your nonprofit’s revenue as possible.

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

Checking your work can save your nonprofit a major headache in the future.

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

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 an e-filer, your nonprofit will be able to submit your form with confidence!

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, 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. From these easy-to-answer questions, the software will automatically fill out the necessary components of the form.

With an authorized e-filer your nonprofit can:

  • Track component filing. You’re able to view the tax filings in real time for each chapter or component of your organization. Plus, you can select to view the filings by component or by year.
  • Feel secure about filing. The best e-filers have bank-level security to ensure all of your nonprofit’s information is stored away in a safe location. The form submission is safe because the software is authorized by the IRS.

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 year’s information for future forms.

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

If you forget to file your IRS Form 990 for three consecutive years, your nonprofit will lose your tax-exempt status. This is a costly mistake!

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

  1. The first deadline is May 15. Your nonprofit will have this deadline if your organization follows the Calendar Tax Year.
  2. The second potential deadline is the 15th day of the 5th month after the month that concludes your fiscal tax 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 tax 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, don’t start thinking that you got off easy. Your penalty for late filing is $100 per day with a maximum charge of $50,000.

Between the threat of penalties and the potential of paying expensive taxes again, your nonprofit should take measures to be sure you file on time every year.

If you think your nonprofit will be late to file, don’t be afraid to ask for an additional time!

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

Tax season is no fun for anyone. But if your nonprofit is like most others, you don’t have room in your budget to lose your tax-exempt status. Be sure you’re ready to file your appropriate IRS Form 990 this year to keep it!

With these tips, you’re ready to take on 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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