The Most Frequently Asked Form 990 Questions
https://www.youtube.com/watch?v=TkmW1eGRIr4
Join Nikita and our superstar client support representative Crissy for another tax talk! This week we’re discussing some of the most common questions we get from our clients about Form 990! Watch the video above or read this transcript!
Nikita
All right, welcome back you guys. Thanks for joining us again this week. Um, again, my name is Nikita. I’m the product manager for Tax990.
Crissy has joined us again this week, um, to go over some common mistakes that we see when people are completing their 990 series forms. So, we’re gonna go ahead and just jump right into it today.
Oftentimes we get so many phone calls from our clients that just have simple mistakes or they’re just unsure of things that really shouldn’t be something that’s holding them up and causing them more time. And the IRS instructions, we know, are so difficult to navigate. So, we just have a couple of things that we wanted to talk about in regards to that and how to avoid some of those things.
So, Crissy, if you want to go ahead and maybe jump in with something that you get a lot of phone calls about in regards to completing the form and kind of how you go about assisting our clients with that.
Crissy
Okay, so I get a lot of questions regarding the first page of the form. The Box indicating is the initial return or the final return.
Nikita
You would check the box for an initial return if this is the very first tax return you’re filing, not with us, but the very first one you’re filing that the whole organization is ever filing, ever.
Crissy
Yes, okay, and then, um, the final return would be if you’re closing your organization, if the organization is dissolving, and this will be your very last tax return for the organization.
Nikita
Okay, so it’s not like if the treasurer is leaving and it’s the last one, the treasurer’s filing, but as far as the whole organization in general?
Crissy
Correct!
Nikita
Okay. So, generally, if they aren’t doing the very first ever return or the very last ever return, they can just leave that whole section blank, right? Just proceed.
Crissy
Yes. A lot of times people get confused and think they’re required to check one of those. Um, you can just move past that box and leave it blank if it doesn’t apply to you.
Nikita
Okay, no, that’s good to know. I think people get so intimidated about leaving things blank on their return.
Crissy
Yes.
Nikita
So I know another question that we get a lot are clients that have a fiscal tax year and how to choose the right form to file and how to provide that accurate information.
Do you want to talk a little bit about what we explained to clients when they have a fiscal tax year and how to go about choosing the right form?
Crissy
Yes, we do see that a lot. So, let’s say you have a tax year with a July 1st, 2020 beginning and a June 30th, 2021 ending, you would actually file the form for 2020. You choose the beginning date to determine what type of form or texture of the form that you need to file.
That gets so confusing for people because they’ll call and they’ll say, “Our tax year ended in 2022, I need to file my ‘22 return,” and it’s difficult sometimes, I think, for us, for people to understand. You know you choose the one that it begins in.
If it begins in 2021 and ends in 2022 like you said, you choose the 2021 return. Next year when it’s 2022-23, you choose the 2022 return, and there’s so much back and forth with that.
Crissy
Yes, just keep in mind you always file the tax year form of the beginning date.
Nikita
Another thing I think that we see a lot is, or we get a lot of phone calls about, because again like I said, people just don’t like to leave spots blank on their form, and there are so many locations on the form that if it doesn’t qualify, you don’t have to complete it.
Another one I know that we get a lot of questions about is the application pending box and the group exemption number box. Again, all on page one when we’re telling people about the organization itself.
Can you talk to us a little bit about when they would choose the application pending box and when they would use the group exemption?
Crissy
Yes, so the application pending box would be if you have not yet received your determination letter from the IRS, but I would suggest calling the IRS to determine if that is the route you should take. But that box is there if you haven’t yet received that.
The group exemption number is if you’re an organization of a smaller organization, such as an auxiliary group, you would put the group organization number for the bigger group and then complete the return for your information.
Nikita
Right, so if they have a group exemption number, they have their own EIN, but the parent organization has the group exemption number, correct?
Crissy
Correct.
Nikita
So, if you don’t know your group exemption number, but you do know that you’re part of a bigger organization or a smaller piece of a bigger organization, you would just have to contact the parent organization for that information, and they should be able to provide it to you.
And then, with the application pending, like you said, you know if you submitted your application to the IRS and you’re not sure if they’ve received it or where you’re at in that status, we definitely suggest calling the IRS first for confirmation, and then you can check that box and proceed with the form if the IRS suggests that.
But we do get so many calls saying, “Well, I haven’t received my status yet, but I know I have to file. How do I do that?” And that’s typically what we recommend: checking that box and confirming with the IRS.
One last one that we’ll briefly discuss here, we get so many phone calls for our clients that have to complete Schedule B and check that box on whether their contribution came from person, payroll, or non-cash. And people will call, and they’ll have just no idea which category their contribution falls under. And oftentimes, we have to explain to them or resort back to the Schedule B instructions.
Do you want to talk a bit about the difference between that person non-cash and payroll contribution option?
Crissy
Sure, so person would be like a monetary donation, in cash or check directly from that person.
A payroll donation would be a deduction from the donor’s payroll, and a non-cash contribution would be anything that’s not monetary.
Nikita
Okay, so like a lot of companies will do a payroll deduction for certain things for certain organizations and things like that, or that go directly into a church. That would be considered a payroll because it came directly from their paycheck to the organization, and the employee never saw it.
Crissy
Right.
Nikita
And then like the cash would be if I give you a check or I give the organization a check or money and things like that, and then the non-cash could be, could be time, could be supplies, could be anything of that nature.
Crissy
Correct.
Nikita
Awesome. Well, thank you so much for all of that information. I think those are some of the biggest issues that we encounter, or that our clients encounter, or are unsure of.
Of course, there’s always going to be little things in between on those forms, but that’s why we’re here, so that you can call us and you can ask those questions, and we can help you through that process or guide you in the right direction.
Next week, I think we’re going to be discussing deadlines and determining your organization’s tax form deadline. So, check out that show next week, tune in for that, follow us on Facebook, on YouTube, all of our social medias, of course, so you can keep up to date on all of these different topics that we’re discussing.
And as always, if you have questions or if you have topics that you would like us to discuss, please reach out. You can give Crissy a call here, you can send us an email, you can just add it to our YouTube channel, any of those avenues will catch it and try to create something from there.
But thank you guys again for joining us and have a great rest of your afternoon!
