Back to the Basics With Your 990 Tax Form

Annual tax compliance for nonprofits

990 Tax Form Thinking of starting a nonprofit? You already know that tax-exempt nonprofits do not pay federal taxes, but did you know they have to file an information 990 form with the IRS?

Many companies are confused on what a 990 tax form is. It is an IRS tax form that tax-exempt nonprofit organizations file each year, allowing the IRS and the public to evaluate nonprofit organizations and how they operate.

Beginning with tax forms filed in 2009 for 2008, nonprofits must file the new Form 990 that requires more disclosure of potential conflicts of interest, compensation of board members and staff, and other details having to do with financial accountability and avoidance of fraud.

A common misconception most organizations have is that they are exempt from paying taxes simply because it has been organized as a nonprofit. Unfortunately, this particular misunderstanding could leave an organization facing tax debt with both the IRS and their state franchise tax board.

Who Files 990 Tax Form?

1)      Private foundations must file a form 990-PF.

2)      Larger nonprofit organizations with gross receipts of more than $50,000 must file a form 990 or 990-EZ.

3)      Smaller nonprofit organizations with gross receipts of less than $50,000 must file 990-N.

Who Doesn’t Have to File Form 990?

Most churches or faith-based organizations, state institutions, and nonprofit subsidiaries are a few of the organizations that are not required to file.

When is the 990 filed?

You must file your 990, 990-EZ, 990-N, or 990-PF by the 15th day of the 5th month after your accounting period ends. Therefore, if your fiscal year ends on December 31, the 990 is due on May 15 of the following year.

Benefits

Nonprofit organizations that simply use their 990 for tax form compliance are missing out on a marketing opportunity. You should put your 990 to work for you and reap the benefits of promoting your nonprofit to donors and foundations!

Common Errors

  • Failing to complete Schedule A, the section of the form that requires charities and certain types of charitable trusts to list the salaries and benefits awarded to top officials and to top-paid independent contractors.
  • Failing to note primary exempt mission as required in the statement of program accomplishments.
  • Arithmetic errors account for about 20% of all 990 tax form.
  • Not having signatures.
  • Failure to attach required supporting schedules.

If I want to see the 990 of a particular nonprofit, how do I do it?

You can get a copy of a nonprofits Form 990 from the IRS, but you can also view it at the charity you are interested in.

Remember, this isn’t an option, this is the law! Make sure your new nonprofit is prepared and understand the facts.

Ready to move forward in filing your 990?

For more information regarding Form 990, visit our Form 990 Tax Preparation page or Contact Us at 407-857-9002

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