IRS Form 990: A Complete Guide for Non-Profit Tax Compliance 2024

Key Takeaways

• IRS Form 990 is an annual return that tax-exempt organizations must file to maintain transparency.
• There are different versions of Form 990 based on the size and type of the organization.
• Filing deadlines are crucial; missing them can lead to penalties or loss of tax-exempt status.
• Accurate and complete information is necessary to comply with IRS requirements.
• E-filing is now mandatory for all non-profits.

Introduction

If you run a non-profit organization in the United States, understanding IRS Form 990 is essential. This form is like a report card that tells the government and the public how your organization is doing. Let’s dive into what Form 990 is all about and why it’s important for your non-profit’s success.

What Is IRS Form 990?

IRS Form 990 is a document that tax-exempt organizations file each year with the Internal Revenue Service (IRS). It provides detailed information about your non-profit’s finances, programs, and governance. This form helps the IRS and the public see how you manage your money and activities.

Why Is Form 990 Important?

Filing Form 990 is not just a legal requirement; it’s a way to show transparency and accountability. When you file this form:

• Donors can see how you use funds, which can encourage more donations.
• The public gains trust in your organization.
• You comply with federal laws, keeping your tax-exempt status safe.

Who Needs to File Form 990?

Most tax-exempt organizations must file Form 990. However, the type of form you file depends on your organization’s size:

• Form 990-N (e-Postcard): For organizations with gross receipts of $50,000 or less.
• Form 990-EZ: For organizations with gross receipts under $200,000 and total assets under $500,000.
• Form 990: For larger organizations with gross receipts of $200,000 or more or total assets of $500,000 or more.
• Form 990-PF: For private foundations.

Different Types of Form 990

Choosing the right form is important. Here’s a quick guide:

1. Form 990-N: A simple electronic form with basic information.
2. Form 990-EZ: A shorter version of the full Form 990.
3. Form 990: The full form with detailed questions.
4. Form 990-PF: Specifically for private foundations, with extra requirements.

Filing Deadlines for Form 990

Your Form 990 is due on the 15th day of the fifth month after your fiscal year ends. For example:

• If your fiscal year ends on December 31, your form is due by May 15.
• Missing the deadline can lead to penalties, so mark your calendar!

Consequences of Not Filing

Not filing Form 990 can have serious consequences:

• Financial Penalties: Daily fines ranging from $20 to $100, up to $50,000.
• Loss of Tax-Exempt Status: If you fail to file for three consecutive years, your organization may lose its tax-exempt status.

Information Needed to Complete Form 990

Before you start, gather these important details:

• Organization Details: Name, address, and mission statement.
• Financial Records: Income, expenses, assets, and liabilities.
• Compensation Information: Salaries and benefits of key staff.
• Governance Information: Board members and management policies.

Steps to File Form 990

1. Determine the Correct Form: Based on your organization’s size.
2. Gather Necessary Information: Collect all financial and operational data.
3. Complete the Form: Fill it out carefully.
4. Review and Sign: Have an authorized person check and sign the form.
5. Submit to the IRS: File electronically as required.
6. Keep Records: Store copies of the form and supporting documents.

E-Filing Requirements

Starting in recent years, the IRS requires all non-profits to file electronically. This makes processing faster and reduces errors. Use an IRS-approved e-filing service to submit your form.

Tips for Completing Form 990

• Be Accurate: Double-check all numbers and information.
• Stay Organized: Keep records updated throughout the year.
• Seek Professional Help: If you’re unsure, consider hiring a tax professional.
• Use Internal Links: For more on bookkeeping, read our Bookkeeping Tips and Tricks.

Common Mistakes to Avoid

• Missing Deadlines: Always file on time.
• Incorrect Information: Ensure all data is correct.
• Incomplete Forms: Fill out all required sections.
• Ignoring New Rules: Stay updated on IRS changes.

Keeping Records After Filing

After you’ve filed:

• Save Copies: Keep digital and physical copies of your Form 990.
• Maintain Financial Records: Keep all supporting documents.
• Review Annually: Use your Form 990 to assess and improve your operations.

Frequently Asked Questions

What Happens If We Lose Our Tax-Exempt Status?

If your organization loses its tax-exempt status, you may have to pay income taxes and cannot receive tax-deductible donations. You would need to reapply to regain this status.

Can We Get an Extension on Filing?

Yes, you can request an automatic 6-month extension by filing Form 8868 before your original due date.

Where Can I Get Help with Form 990?

Consider consulting a tax professional or using IRS resources. For assistance with bookkeeping, check out our guide on How to Hire a Bookkeeper.

Understanding and filing IRS Form 990 doesn’t have to be overwhelming. By staying informed and organized, your non-profit can continue to focus on making a positive impact.