It’s time for Nonprofits to Gear Up for the 2024 Form 990 Filing Season!

As the tax season for businesses draws to a close, nonprofits must now prepare for their own tax season. This annual process is crucial for nonprofits to maintain compliance with regulatory obligations and demonstrate transparency, accountability, and responsible management of donor funds.

While preparing for this, nonprofits must navigate through intricate financial details, organizational disclosures, and other data to present a comprehensive snapshot of their annual activities on Form 990. It may seem daunting, but with meticulous planning, attention to detail, and keen understanding, nonprofits can fulfill their fiduciary duties and maintain the trust of their contributors. 

In this blog, we’ll steer you through the details that, as a nonprofit, you should know before filing your 990 forms.

Understanding Nonprofit Tax Compliance

As you may know, the federal government grants nonprofit organizations tax exemptions if they meet the specified requirements. 

If you are a nonprofit organization that obtained tax-exempt status from the IRS, one of the crucial aspects that you must remember is your annual filing requirement. You are liable for reporting your financial status and activities to the IRS via 990 forms annually to ensure compliance with the IRS regulations. 

990 Series Forms are devised specifically for the annual reporting purposes of nonprofits and tax-exempt organizations. Unlike other tax forms, these forms are open to public inspection. So nonprofits must ensure flawless 990 filing to foster public trust in them.

Choosing the Right 990 Forms for Your Organization

There are 5 different types of 990 forms, each with its own significance and requirements. Knowing the peculiar details and guidelines of each form can help you pick out the right form.

Form 990-N (E-postcard)

If you are a small nonprofit organization with a gross receipt of $50,000 or less, you can use Form 990-N. This form is also called an electronic postcard (E-postcard) because it requires fewer details than other forms. 

Form 990-EZ (Short form)

If you are a nonprofit organization that has gross receipts of less than $200,000 and assets of less than $500,000, you can use file Form 990-EZ. It is a shortened version of the standard 990 form.

Form 990 (Long form)

If you are a nonprofit organization that has gross receipts of more than or equal to $200,000 (or) assets of more than or equal to $500,000, you can use Form 990.

Form 990-PF

If you are a nonprofit organization that falls under the category of a private foundation, then you must file this form irrespective of gross receipts.

Form 990-T

Form 990-T is a supporting form that can be used when you have an unrelated business income (UBI) of $1000 or more.  

In addition to these forms, appropriate 990 Schedules must be attached in order to provide additional information about the details reported on the main form.

990 Deadlines, Extensions, and Penalties 

The IRS has set the deadline for 990 filing for nonprofits as the 15th day of the 5th month. This means that organizations following the calendar tax year must file Form 990 in two weeks, by May 15, 2024.

If you require additional time to file a 990, you can file Form 8868 by the deadline and receive an automatic extension of up to 6 months. However, failing to file these forms before the deadline may result in penalties ranging from $20 to $120 per day, depending on your organization’s type.

Moreover, your nonprofit could risk losing its tax-exempt status if it fails to file its 990 return for more than three years.

E-file Mandate for 990 Returns

Unlike other tax forms, the IRS mandates that 990 forms must be submitted exclusively electronically. When filing your 990 returns electronically, selecting an IRS-authorized e-file provider is crucial.

Enter our sister product, Tax990, specifically designed to manage the tax obligations of nonprofits! Enhance your 990 filing experience with these comprehensive features and more:

• Direct-form entry and interview-style filing options offer you the flexibility to complete your form using the method that best suits your needs.
• Their internal audit check feature checks your form based on the IRS Business Rules, preventing common errors and missing information. 
• The required 990 Schedules are included in the filing fee, so there are no additional costs. Additionally, prior year filing and 990 amendments are supported, making it easy to file past returns or correct previous filings. 
• If your return is rejected, you can easily amend any errors and retransmit it to the IRS for free. 
• You can even share 990 returns with your key organization officials and board members for final approval using the ‘Reviewers and Approvers‘ feature. 

If you are looking for an easier way to file your 990 returns for this season, Tax990 can be your ideal choice. 

Interested in learning more about 990 filing requirements for nonprofits? Register for our free webinar, sponsored by Tax990! Click here to reserve your spot.