What Form 990 Do You Need? A Nonprofit Guide

For each program service, section 501(c)(3) and 501(c)(4) organizations must report any revenue derived directly from the activity, such as fees for services or from the sale of goods that directly relate to the listed activity. This revenue includes program service revenue reported in Part VIII, line 2, column (A), and includes other amounts reported on Part VIII, lines 3–11, as related or exempt function revenue. Also include unrelated business income from a business that exploits an exempt function, such as advertising in a journal.

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Don’t report on line 22 loans and payables excepted from reporting on Schedule L (Form 990), Part II (except for excess benefit transactions involving receivables). Enter the net amount of all notes receivable and loans receivable not listed on lines 5 and 6, including receivables from unrelated third parties. The term “unrelated third parties” includes independent contractors providing goods or Certified Bookkeeper services and employees who aren’t current or former officers, directors, trustees, key employees, highest compensated employees, or disqualified persons. Enter the organization’s total accounts receivable (reduced by any allowance for doubtful accounts) from the sale of goods and the performance of services.

Certain membership benefits.

However, the preceding sentence doesn’t apply if it results in no person being liable for the penalty. Section 4958 applies the general rules to excess benefit transactions occurring on or after September 14, 1995. Section 4958 doesn’t apply to any transaction occurring pursuant to a written contract that was binding on September 13, 1995, and at all times thereafter before the transaction occurs. The special rules relevant to transactions with donor advised funds and supporting organizations apply to transactions occurring after August 17, 2006, except that taxes on certain transactions between supporting organizations and their substantial contributors apply to transactions occurring on or after July 25, 2006. A tax-exempt organization isn’t required to comply with a request for a copy of its application for tax exemption or an annual information return if the organization has made the requested document widely available (see below). A tax-exempt organization must fulfill a request for a copy of the organization’s entire application for tax exemption or annual information return or any specific part or schedule of its application or return.

• The maximum penalty for failures by any organization, during any calendar year, shall not exceed $10,000.
• Enter all investment income actually or constructively received from investing the proceeds of a tax-exempt bond issue , which are under the control of the organization.
• All reportable compensation paid by the filing organization must be reported.
• A 990 can document your accomplishments in the previous year, how employees were paid, how donor money was used, and more so that the public feels they can trust your nonprofit.
• An applicable tax-exempt organization is a section 501(c)(3), 501(c)(4), or 501(c)(29) organization that is tax exempt under section 501(a), or was an organization at any time during a 5-year period ending on the day of the excess benefit transaction.
• Form 990, Part VII, requires the listing of the organization’s current or former officers, directors, trustees, key employees, and highest compensated employees, and current independent contractors, and reporting of certain compensation information relating to such persons.

Filing Deadlines

This method aligns with the IRS’s modernization efforts, ultimately making the filing process more efficient. A proactive approach to a nonprofit’s tax strategy What is Legal E-Billing can maximize savings, ensure compliance, and optimize resources. Tax professionals address unique nonprofit tax needs, making their involvement crucial for successful tax preparation.

Bonus Step: You can always file for an extension.

Having an accountant or someone familiar with IRS regulations on your board can help ensure a complete and accurate submission of all necessary tax forms. To ensure timely submission, nonprofits should set reminders well in advance of the deadline and use electronic tools for scheduling and filing. This proactive approach helps avoid last-minute rushes and reduces the risk of missing deadlines. E-filing Form 990 simplifies submission for nonprofits by providing immediate filing confirmation and reducing processing delays. The Taxpayer First Act requires most nonprofits to e-file, ensuring compliance and efficient processing. Choosing the right tax expert is crucial for effective nonprofit tax preparation.

An officer that served at any time during the organization’s tax year is deemed a current officer. The officers of an organization are determined by reference to its organizing document, bylaws, or resolutions of its governing body, or as otherwise designated consistent with state law, but, at a minimum, include those officers required by applicable state law. Officers can include a president, vice president, secretary, treasurer, and, in some cases, a Board Chair. In addition, for purposes of Form 990, including Part VII, Section A, and Schedule J (Form 990), treat as an officer the following persons, regardless of their titles. Organizations that file Form 990 must make it publicly available for a period of 3 years from the date it is required to be filed (including extensions) or, if later, is actually filed.

Return of Organization Exempt From Income Tax – Additional Material

Used to report net income from qualified intellectual property to the IRS and the donor. Go to IRS.gov/Forms to view, download, or print all of the forms, instructions, and publications you may need. The IRS can refute the presumption of reasonableness only if it develops sufficient contrary evidence to rebut the probative value of the comparability data relied upon by the authorized body. This provision gives taxpayers added protection if they faithfully find and use contemporaneous persuasive comparability data when they provide the benefits. The following economic benefits are disregarded for purposes of section 4958.

• The organization is required to report on Schedule R (Form 990) certain information regarding ownership or control of, and transactions with, its disregarded entities and tax-exempt and taxable related organizations.
• A Type II supporting organization is controlled or managed by the same persons that control or manage its supported organization(s).
• An excise tax equal to 25% of the excess benefit is imposed on each excess benefit transaction between an applicable tax-exempt organization and a disqualified person.
• However, the cost to the charity may be used in determining whether the benefits are insubstantial.
• For descriptions of each of these disregarded benefits, see the Instructions for Schedule J (Form 990).
• However, private foundations must file Form 990-PF and black lung benefit trusts must file Form 990-BL.

Also, organization managers who participate in an excess benefit transaction knowingly, willfully, and without reasonable cause are liable for a 10% tax on the excess benefit, not to exceed $20,000 for all participating managers on each transaction. A local or subordinate organization that doesn’t file its own annual information return (because it is affiliated with a central or parent organization that files a group return) must, upon request, make available for public inspection, or provide copies of, the group returns filed by the central or parent organization. Report here the total book value of all investments made primarily to accomplish the organization’s exempt purposes rather than to produce income. Examples of program-related investments include student loans and notes receivable from other exempt organizations that obtained the funds to pursue the filing organization’s exempt function.