Not-For-Profit Tax Returns: Everything You Need to Know
Most charitable nonprofit organizations are still required to file tax returns with the IRS annually, even if they have achieved tax-exempt status.3 min read
What are not-for-profit tax returns, and are you required to file one for your organization? Most charitable nonprofit organizations are still required to file tax returns with the IRS annually, even if they have achieved tax-exempt status. "Tax-exempt" means these nonprofit organizations do not pay federal taxes on income that's associated with their expressed mission and programs. However, the IRS still requires an informational return filing, called IRS Form 990. For example, all Section 501(c)(3) private organizations must file a Form 990 annually.
Using Form 990, the IRS and the public can evaluate the organization's operations. The form contains information pertaining to the nonprofit organization's purpose, programs, and financial information. As the law does not require annual reports from tax-exempt organizations, documents such as Form 990 allow for public disclosure of important information related to the organization. Available on GuideStar and upon request from the nonprofit organization, Form 990 is a public document as per the IRS "public disclosure" regulations.
Types of IRS Form 990
Depending on the filing year and gross receipts of the nonprofit organization, different types of Form 990 may be used. The different types include Forms 990, 990-EZ, 990-N, and 990-PF. Information provided by the IRS can help you decide which form you need to file.
- Form 990 can be used by larger nonprofit organizations with gross receipts of more than $50,000.
- Form 990-EZ is a short form return that can be used by nonprofit organizations with total receipts of $100,000 and less than $250,000 in assets.
- Form 990-N (e-Postcard) can be used by smaller nonprofit organizations with gross receipts of less than $50,000.
- Form 990-PF can be used by private foundations.
- Form 8868 can be used to request an automatic three-month extension of filing time.
Do All Nonprofit Organizations Need to File a Form 990?
Not every nonprofit organization is required to file an annual tax return. In general, the organizations that do not need to file a Form 990 are:
- Branches of other nonprofits: Subsidiaries of larger nonprofit organizations may be covered under a general return filed by the parent nonprofit organization.
- Many government corporations.
- State organizations that provide essential services
- Smaller nonprofit organizations: Those with annual incomes of $25,000 or less do not need to file; this is most likely due to staffing and cost constraints of the IRS.
- Nonprofit organizations not yet in the system: Organizations that have not yet applied for exemption from federal income tax are not required to file a Form 990 as the IRS would not yet have the organization's information.
- State institutions: Organizations that provide essential services, such as universities, do not need to file a Form 990.
- Churches and other faith-based organizations
Filing an IRS Form 990
- Determine if you need to file by checking with the IRS.
- Determine which tax form to file, depending on the amount of money your organization made in the applicable tax year.
- Fill out the appropriate tax form. For smaller nonprofit organizations, a manager may suffice for filling out the form. For larger nonprofit organizations, it may be wise to consult an accountant experienced in handling tax-exempt financial information and returns.
It's important to print both the form and the instructions and make sure you follow the instructions for each item in order to provide the appropriate information.
- Submit your tax return on time either by e-filing or mailing it to the IRS.
The address for mailing returns is:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027
Your tax return due date is dependent on your organization's fiscal year. Your tax return will be due on the 15th day of the fifth month after the end of your nonprofit organization's fiscal year. You must file your tax return form with the IRS before that deadline for it to be valid for that year.
Should you need an extension, the IRS offers an extension form (Form 8868). You must submit your extension no later than your return due date. If your nonprofit organization fails to file tax returns, severe penalties may result, including the loss of tax-exempt status. You may not extend the due date for Form 990-N (e-Postcard. However, there is no penalty for filing it late.
It's best to hire an attorney to assist your nonprofit organization in handling its tax return. If you need help with not-for-profit tax returns, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.