Even if your nonprofit organization has tax-exempt status from the IRS, you must file Form 990 every year to be in compliance with regulations. Any tax form can be intimidating if you don’t understand it.
As this year’s tax deadline approaches, we’ve been hearing one question from our nonprofit clients at CFE:
What are the requirements for nonprofit tax returns?
It’s essential to know what your legal and fiscal responsibilities are before you file Form 990. With that in mind, we’ve put together this list of five federal filing requirements for nonprofit tax returns.
#1: Who Must File Form 990?
The first requirement is, of course, the form itself. Most charitable organizations must file Form 990.
Here’s a breakdown of the requirements:
- All private foundations, regardless of income, must file Form 990-PF.
- Most tax-exempt nonprofits with gross receipts of $200,000 or more (or assets worth $500,000 or more) must file Form 990.
- Small nonprofits with gross receipts of $50,000 or less must file the e-Postcard form 990-N to maintain their tax-exempt status.
- Larger nonprofits with gross receipts of over $50,000 may file either Form 990 or Form 990-EZ.
- Organizations that have tax-exempt status under Sections 501(c), 527, or 4947(a)(1) of the US tax code must file Form 990 unless they meet one of the following exemptions:
- Churches and most faith-based organizations
- Subsidiaries of charities (where the parent will submit a group return
- State institutions who provide essential services (universities, for example)
- Government corporations
You can find a full list of the IRS list of exceptions here. If you’re not sure whether you need to file Form 990, call the IRS and ask.
#2: When to File Form 990
If you have tax-exempt status, the regular tax deadline of April 15 doesn’t apply to your organization. However, you do have a deadline for filing Form 990.
You must file the proper version of Form 990 by the 15 day of the fifth month after your accounting period ends. That means if your fiscal year is the same as the calendar year and ends on December 31, your Form 990 would be due on May 15 of the following year.
As is the case with most IRS forms, you may request an extension. The IRS limits them to two, ninety-day extensions per year. The extensions are not allowed for 990-N (postcard) filers. It's important that you file on time. If you don't file a Form 990 for three years in a row, your tax-exempt status will be automatically revoked by the IRS. If that happens, there is no appeal process, and you may be required to pay income taxes and user fees. You may also need to file additional paperwork. The best way to avoid this outcome is to file Form 990 on time every year.
#3: Which Version of Form 990 to File
If you work for a tax-exempt organization, you will need to file one of these three forms:
- Form 990
- Form 990-EZ
- Form 990-N
New rules and updates are always possible, so we recommend you look at this IRS threshold chart to find out which form applies to your organization.
If your organization is a 501(c)(3) private foundation or a 4947(a)(1) nonexempt charitable trust, you will need to file form 990-PF. All versions of Form 990, together with instructions on how to fill them out, can be found on the IRS website.
#4: Fill Out the Form Completely According to the Instructions
It’s very important to fill out the proper version of Form 990 according to the Internal Revenue Service’s instructions. You’ll be required to report your revenue and other financial items, including a list of your five largest vendors and your five highest-paid employees.
One of the benefits of completing Form 990 is that you can use it to fulfill state reporting requirements in most states, as well.
#5: Make Your Form 990 Filing Public
One thing that sometimes surprises people new to the nonprofit world is that when you file Form 990 with the IRS, you must also make the filing public. Keep in mind that making this form public may actually help your organization if you do it properly.
For example, you can use your Form 990 to clarify your mission and show how you use the money that donors give you. Some nonprofit organizations make their Form 990 part of their annual report or set up a separate page for it on their website.
Meeting your federal filing requirements is a must. The five items we’ve outlined here will ensure you identify the proper version of Form 990, file it on time, and maintain your tax-exempt status with the IRS.
To learn about CFE’s checking accounts for nonprofit organizations, please click here.