5 Things Nonprofits Should Do to Avoid 990 Penalties

How to avoid 990 series filing penalties from the IRS

Nonprofits contribute to a wide array of causes, both financially and materially. Facing IRS penalties means less money to support these causes, and no one wants that! Read these 5 tips on how to avoid IRS 990 penalties and save your organization’s resources for your cause!

1. Get ahead of your deadline

The most important part of filing on time is knowing your filing deadline. If you don’t know your due date, you’ll likely miss it and face penalties.

Most 990 series forms are due on the 15th day of the 5th month after the end of the organization’s tax year. Some forms may have slightly different deadlines.

For example, Form 990-T is due on the 15th day of the 5th month after the tax year ends for most nonprofit organizations. However, Trusts that are defined in section 401(a), IRAS including SEPs and SIMPLEs, Roth IRAs, Coverdell ESAs, or 408(a) (Archer MSAs) are required to file by the 15th day of the 4th month after the end of the tax year.

Form 1120-POL is also due on the 15th day of the 5th month following the tax year. Form 8038-CP should be filed between 45 and 90 days before the date when the relevant interest was paid.

If you file a Form 8868 extension request, you will be granted a 6-month extension on your due date. You must file Form 8868 on or before your original 990 deadline.

2. File the right form

If you file the wrong type of 990 form for your organization, you may be penalized. Each form has a specific type of organization that files it.

  • Form 990-N is intended for organizations with gross receipts below $50,000
  • Form 990-EZ is intended for organizations with gross receipts below $200,000 and assets below $500,000
  • Form 990 is intended for organizations with gross receipts $200,000 or assets ≥ $500,000
  • Form 990-PF is intended for private foundations
  • Form 990-T is intended for organizations that earn $1,000 of unrelated business income during their tax year

If you need more time to complete your 990 returns, you can file Form 8868 and get an extension of up to 6 months.

3. Gather your information and keep it close while filing

Gathering all of the required information you’ll need to report will save you so much time. You won’t have to spend time searching for all of your information while trying to file. This will also prevent you from having to frequently leave your form and come back after finding certain details. 

The information you should keep handy while you file includes

  • Financial information such as revenue, expenses, assets, and liabilities
  • Your organization’s gross receipts
  • Program service accomplishment details
  • Other IRS filings and tax compliance requirements
  • Details of key personnel, governing body, and management details

4. Double-check your information

The IRS will penalize you for filing late but did you know that you may also be penalized for filing incorrect information or omitting required information? This is why you should always verify all information you are providing. If you catch your mistake after you file your nonprofit tax form, you can file an amended return, but you will have to pay to transmit it again. 

Tax990 includes an internal audit check that will audit your form for IRS instruction errors and notify you before you transmit it to the IRS, but you should still go through your entire form yourself to be absolutely sure you didn’t miss anything before you transmit.

5. Don’t be afraid to reach out for help!

Tax990 is proud to offer a dedicated customer support team for assistance with any questions you may have about the filing process or Tax 990 itself. Our team is available via email at [email protected], phone at (704) 839-2321, or live chat through our website. We can be reached from Monday to Friday from 8:30 AM – 5:30 PM EST. We even offer extended support hours during peak filing times. 

File your 990 forms with Tax990 for a hassle-free filing experience!

Tax990 offers several helpful features to enhance your filing process. Our website is full of informative filing guides, FAQs and trending questions, helpful blogs and videos, and more. Best of all, you can access all of these great resources for FREE!

You can take advantage of features like a bulk upload template for grants and contributions details, the ability to copy data from previously Tax990-filed 990 returns that are securely stored in your account, and the option to choose between a form-based or an interview-based filing method at your convenience. Explore all of Tax990’s resources and features today!