A Beginner’s Guide to Filing a Form 990 for Nonprofit Organizations

Organizations that report more than $15,000 on line 9a must also answer “Yes” on Part IV, line 19, and complete Part III of Schedule G (Form 990). Fundraising events sometimes generate both contributions and income, such as when an individual pays more than the retail value for the goods or services furnished. Report in parentheses the total amount from fundraising events that represents contributions rather than payment for goods or services. The stock is delivered to the charity’s broker, who sells it on the same day and remits the sales proceeds, net of commissions, to the charity.

Schedule of Contributed Support (Schedule B)

Examples include prepayments of rent, insurance, or pension costs, and expenses incurred for a solicitation campaign to be conducted in a future accounting period. In column (A), enter the amount from the preceding year’s Form 990, column (B). If the organization was excepted from filing Form 990 for the preceding year, enter amounts the organization would have entered in column (B) for that year. If this is the organization’s first year of existence, enter zeros on lines 16, 26, 32, and 33 in column (A). Enter the amount that the organization, at its own discretion, paid in grants to domestic organizations and domestic governments. United Way and similar federated fundraising organizations should report grants to member or participating agencies on line 1.

Certain goods or services provided to donor’s employees or partners.

While some states may require reporting according to ASC 958, the IRS doesn’t. However, a Form 990 return prepared according to ASC 958 will be acceptable to the IRS. For purposes of Schedule F (Form 990), Statement of Activities Outside the United States, include grantmaking, fundraising, unrelated trade or business, program services, program-related investments, other investments, or maintaining offices, employees, or agents in particular regions outside the United States. Enter the total of (a) all pledges receivable, less any amounts estimated to be uncollectible, including pledges made by officers, directors, trustees, key employees, and highest compensated employees; and (b) all grants receivable. Enter the total expenses incurred by the organization in conducting meetings related to its activities. Include such expenses as facility rentals, speakers’ fees and expenses, and printed materials.

Goods or services with insubstantial value.

Also, an organization that files Schedule B must report certain information on noncash contributions. To avoid the imposition of the 200% tax, a disqualified person must correct the excess benefit transaction during the tax period. The tax period begins on the date the transaction occurs and ends on the earlier of the date the statutory notice of deficiency is issued or the section 4958 taxes are assessed. This 200% tax can be abated if the excess benefit transaction is subsequently corrected during a 90-day correction period. As a general rule, in the case of a nonfixed payment, no rebuttable presumption arises until the exact amount of the payment is determined, or a fixed formula for calculating the payment is specified, and the three requirements creating the presumption have been satisfied.

Do I Need to File State Forms as Well?

A significant part of running an effective nonprofit organization is maintaining strong financial management—and a major aspect of financial management is filing your annual nonprofit tax return. Form 990 provides the government and the public with an overview of an organization’s activities for the year. Donors may use Form 990 to assess an organization’s financial health and governance before contributing. The IRS requires extensive information from each organization, and the instructions for completing the form span 100 pages.

Documentation permitted by state law can include approved minutes, email, or similar writings that explain the action taken, when it was taken, and who made the decision. For this purpose, contemporaneous means by the later of (1) the next meeting of the governing body or committee (such as approving the minutes of the prior meeting), or (2) 60 days after the date of the meeting or written action. If the answer to either line 8a or 8b is “No,” explain on Schedule O (Form 990) the organization’s practices or policies, if any, regarding documentation of meetings and written actions of its governing body and committees with authority to act on its behalf. If “Yes,” describe on Schedule O (Form 990) the class or classes of such persons, the decisions that require their approval, and the nature of their voting rights. Answer “Yes” if the organization became aware during the organization’s tax year of a significant diversion of its assets, whether or not the diversion occurred during the year. If “Yes,” explain the nature of the diversion, dollar amounts and/or other property involved, corrective actions taken to address the matter, and pertinent circumstances on Schedule O (Form 990), although the person or persons who diverted the assets shouldn’t be identified by name.

• A payment by a governmental agency to a medical clinic to provide vaccinations to the general public is a contribution reported on line 1e.
• Section B requires reporting of the five highest compensated independent contractors.
• See Appendix I. Use of Form 990 or 990-EZ To Satisfy State Reporting Requirements.
• See Appendix D. Public Inspection of Returns, and the Instructions for Schedule B (Form 990) for more details.
• Every year, each subordinate organization must authorize the central organization in writing to include it in the group return and must declare, under penalties of perjury, that the authorization and the information it submits to be included in the group return are true and complete.
• Public Inspection IRC 6104(d) regulations state that an organization must provide copies of its three most recent Forms 990 to anyone who requests them, whether in person, by mail, fax, or e-mail.

Appendix F. Disregarded Entities and Joint Ventures—Inclusion of Activities and Items

• An accounting method for an item of income or deduction may generally be adopted separately for each of the taxpayer’s trades or businesses.
• For example, report expenses for employee events such as a picnic or holiday party on line 9.
• However, because the 25% gift shop discount to K’s employees differs from the 10% discount offered in the basic membership benefits package, J’s disclosure statement must describe the 25% discount but need not estimate its value.
• Report on line 25 (and not line 23) any secured mortgages and notes payable to related organizations.

Many items of compensation may or may not be taxable or currently taxable, depending on the plan or arrangement adopted by the organization and other circumstances. The list attempts to take into account these varying facts and circumstances. The list is merely a guideline to report amounts for those persons required to be listed. In all cases, items included in box 1 or 5 of Form W-2 (whichever is greater), in box 1 of Form 1099-NEC, and/or in box 6 of Form 1099-MISC are required to be Certified Bookkeeper reported on Part VII, Section A, and, for applicable persons, Schedule J (Form 990), Part II, column (B). Items listed as “taxable” or “taxable in current year” are currently includible in reportable compensation, but aren’t necessarily subject to federal income tax in the current year.

• A diversion of assets can in some cases be inurement of the organization’s net earnings.
• Section 501(c) organizations, and Section 527 organizations use Schedule C (Form 990 or 990-EZ) to furnish additional information on political campaign activities or lobbying activities.
• For an employee who works on fundraising 40% of the time and program management 60% of the time, an organization must allocate that employee’s salary 40% to fundraising and 60% to program service expenses.
• Applications filed before July 15, 1987, need not be made publicly available unless the organization had a copy on July 15, 1987.
• However, if the tenant’s activities aren’t program related, report the rental income on Part VIII, line 6a, and related rental expenses on Part VIII, line 6b.
• If the organization’s short year began in 2024, and ended before December 31, 2024 (not on or after December 31, 2024), it may use either 2023 Form 990 or 2024 Form 990 to file for the short year.

Unrelated Business Income Tax (UBIT) applies to income generated by nonprofits from activities unrelated to their primary purpose. Certain nonprofits with unrelated business income must file Form 990-T in addition to their annual return. Complying with UBIT regulations avoids potential tax liabilities and maintains tax-exempt status. Adhering to IRS filing requirements is crucial for maintaining tax-exempt status. Nonprofits must annually file the correct version of Form 990 to stay compliant and transparent.

Used to notify the IRS of a change in mailing address that occurs after the return is filed. The Patient-Centered Outcomes Research fee is imposed on issuers of specified health insurance policies (section 4375) and plan sponsors of applicable self-insured health plans (section 4376) for policy and plan years ending on or after October 1, 2012. On IRS.gov, you can get up-to-date information on current events and changes in tax law. An organization that has a permanent office, but has no office hours, or very limited hours during certain times of the year, must make its documents available during those periods when office hours are limited, or not available, as though it were an organization without a permanent office. The IRS can’t disclose portions of an exemption application relating to any trade secrets, etc. Additionally, the IRS generally can’t disclose the names and addresses of contributors.

Effective bookkeeping is a vital component of successful nonprofit management, supporting the organization’s mission and long-term sustainability. Organizations should also utilize reminders and scheduling tools to ensure that all filings are completed on time. By prioritizing timely submission, nonprofits can avoid costly penalties and maintain their tax-exempt status.

Enter on Schedule O (Form 990) the parts and schedules of the Form 990 that were amended and describe the amendments. Some lines request information reported on other forms filed by the organization (such as Forms W-2, 1099, and 990-T). If the organization is aware that the amount actually reported on the other form is incorrect, it must report on Form 990 the information that should have been reported on the other form (in addition to filing an amended form with the proper amount).