Nonprofit Organization Income Tax Return (Form 990)

What is Form 990?

Form 990, Return of Organization Exempt from Income Tax, is an essential tax document for tax-exempt organizations, such as charities, nonprofits, and foundations, required by the IRS to report their financial activities. Nonprofits use Form 990 to provide detailed information about their mission, programs, and finances, ensuring transparency and accountability to the public, donors, and government agencies. The form helps the IRS determine whether the organization is operating in compliance with its tax-exempt status and not engaging in activities that would jeopardize it.

Form 990 is designed for larger nonprofits with gross receipts over $200,000 or total assets exceeding $500,000, but smaller organizations may use abbreviated versions (Form 990-EZ or Form 990-N). By filing Form 990, nonprofits can maintain their tax-exempt status and assure donors and the public that their funds are being used for charitable purposes.

When is the Due Date for Form 990?

The due date for Form 990 is typically the 15th day of the 5th month after the end of the organization’s fiscal year. For example, if a nonprofit operates on a calendar year (ending December 31), the Form 990 would be due on May 15 of the following year.

Nonprofits can request an automatic extension of six months if they are unable to meet the original deadline. However, even if the form is extended, the organization must still pay any taxes owed by the original due date to avoid penalties and interest.

What Information Do You Need to Provide?

Form 990 requires detailed financial and operational information, including:

1. Organizational Information:

• Name, address, and EIN (Employer Identification Number) of the nonprofit.

• Description of the organization’s mission, activities, and programs.

2. Financial Information:

• Statement of Revenue: Reports all income from donations, grants, investments, and other sources.

• Statement of Functional Expenses: Breaks down how funds were spent on program services, management and general expenses, and fundraising activities.

• Balance Sheet: Shows the organization's assets, liabilities, and net assets (fund balances).

• Statement of Cash Flow: A summary of how cash moves in and out of the nonprofit.

3. Governance Information:

• List of board members, key officers, and highest-paid employees.

• Disclosures about any conflicts of interest or related-party transactions.

• Information on the nonprofit’s governance structure, policies, and practices.

4. Compliance and Oversight:

• Nonprofits must answer questions about their compliance with IRS requirements, including whether they’ve provided annual statements to donors, filed other required tax forms, and complied with rules regarding political activities or lobbying.

5. Tax-Exempt Status:

• Nonprofits must explain how they meet the IRS requirements to maintain their tax-exempt status, including whether they operate primarily for exempt purposes and avoid private inurement (benefiting insiders).

How to File Form 990

Form 990 can be filed electronically through the IRS e-file system, or it can be submitted by mail. While many larger organizations file electronically, smaller nonprofits may still opt for the paper version.

For electronic filing, the nonprofit needs to use the IRS-approved e-file providers or utilize commercial tax preparation software designed for nonprofits.

Additional Forms to Consider

Nonprofits may need to file additional forms alongside Form 990, depending on their activities and circumstances:

• Schedule A: For public charities to provide detailed information about their public support and operational history.

• Schedule B: Required if the organization receives significant contributions from major donors, showing details about these donations.

• Schedule G: Reports the compensation of officers, directors, trustees, and key employees.

• Schedule C: For reporting lobbying and political campaign activities.

• Schedule D: Discloses additional financial information, such as non-cash contributions, conservation easements, and similar matters.

Penalties for Late or Incorrect Filing

Nonprofits that fail to file Form 990 by the deadline may be subject to penalties. The penalty starts at $20 per day for organizations that are late, up to a maximum of $10,000 (or $50,000 for large organizations). If a nonprofit fails to file for three consecutive years, it could lose its tax-exempt status.

Additionally, inaccuracies in the form—such as omissions or providing misleading information—could lead to audits, penalties, or even the revocation of tax-exempt status.

Why Choose 30A Coastal Accounting Services for Form 990?

At 30A Coastal Accounting Services, we specialize in supporting nonprofits in filing Form 990 and ensuring compliance with IRS regulations. Our experienced team can help you prepare and file accurate, timely forms, advise on financial reporting, and assist with maintaining your tax-exempt status. We work with organizations of all sizes, from local charities to large foundations, to simplify the tax process and minimize the risk of penalties.

Contact Us Today!

If your nonprofit needs assistance with Form 990 preparation, filing, or general tax advice, reach out to 30A Coastal Accounting Services. We provide customized support tailored to the needs of your organization, helping you stay compliant and transparent with your stakeholders.

Form 990 Filing Checklist

• Organizational Information:

  • Confirm organization’s name, address, and EIN.

  • Provide a detailed description of the mission and activities.

• Financial Information:

  • Prepare a statement of revenue and expenses.

  • Ensure the balance sheet is accurate and up-to-date.

  • Complete the statement of functional expenses.

• Governance and Compliance:

  • List board members and key employees.

  • Review and disclose any conflicts of interest or related-party transactions.

  • Confirm compliance with IRS requirements and lobbying rules.

• Additional Forms:

  • Schedule A for public charity status.

  • Schedule B for large contributions.

  • Schedule G for officer and director compensation.

  • Schedule C for political activities (if applicable).

By staying organized and preparing early, you can ensure that your nonprofit meets all filing requirements and maintains its tax-exempt status.