All nonprofits know that when tax season rolls around, it’s time to file your 990. But what is a 990 form? Why is it important for your nonprofit? In this article, we will discuss Form 990 and its purposes.
Form 990 – an Overview
Form 990 is an annual tax-exempt return for organizations exempt from federal taxes. Organizations use Form 990 to report financial information as well as activities undertaken throughout their tax year.
This form is very important for organizations to file. Primarily, it allows the IRS to make sure the organization is not abusing its tax-exempt status. On the other hand, this form is made available for public review, therefore, it is very valuable to the organization itself.
Reviewing an organization’s Form 990 allows individuals to gain a sense of the organization’s mission as well as how it allocates its funds towards its cause. This information may help someone decide to volunteer or support the organization.
Who files Form 990?
Organizations that are exempt from federal tax and have gross receipts greater than or equal to $200,000 (or) total assets greater than or equal to $500,000 at the end of the tax year must file Form 990.
Other than this, different versions of Form 990 have been developed for organizations of different sizes and operations. These variants include:
- Form 990-N – Filed by organizations with gross receipts of less than or equal to $50,000
- Form 990-EZ – Filed by organizations with gross receipts less than $200,000 and total assets less than $500,000
- Form 990-PF – Filed by private foundations and used to calculate the taxes based on investment income and report charitable distributions
- Form 990-T – Filed by tax-exempt organizations that have a gross income of $1,000 or more from unrelated businesses
Are there any recent IRS updates about Form 990 for the 2022 Tax Year?
Actually, there are no major updates. The IRS has revoked Ann. 2001-33, which stated that organizations have reasonable cause for purposes of relief from the penalty imposed under § 6652(c)(1)(A)(ii) if they have reported their compensation details as described in the manner described in Ann. 2001-33 instead of following the specific form instructions.
Therefore, the organizations must still follow the corresponding 990 form instructions to report the compensation details. For more information, visit here.
When should I file Form 990?
Generally, the due date is always the 15th day of the 5th month after the end of the organization’s tax year. This deadline varies for each organization based on the accounting period they follow. This means that if an organization runs on a calendar tax year, its 990 deadline for the 2022 Tax year will be May 15, 2023.
Note: If a deadline falls on a weekend or holiday, the due date will be pushed back to the next business day.
Not sure about your organization’s 990 deadline? Try our Due Date Calculator.
What if I don’t file Form 990?
If you fail to file your 990 return, you will be penalized by the IRS. Penalties vary by the size of the organization. You can learn more about penalty amounts here.
If you fail to file a Form 990 for three consecutive years, your tax-exempt status will be automatically revoked.
In case you need more time to file your 990 return, you can file Form 8868 to apply for a 6-month automatic extension.
How should I file Form 990?
The IRS mandates that all 990 series returns must be filed electronically. Therefore, the only way you can file your 990 forms is by getting started with an IRS-authorized e-file provider. And, Tax990 is your perfect choice.
Tax990 supports the e-filing of all 990 forms and their supporting 990 Schedules. The cloud-based software includes several time-saving features, such as the ability to copy data from previously filed returns to their current return and upload contributions and grant details in bulk using Excel templates.
Additionally, you can take advantage of a built-in audit check that catches and alerts them of errors before transmitting the form to the IRS. Tax 990 also offers live customer support via email, phone, and live chat. Our website also features several helpful guides, videos, and blogs.