About IRS Form 990

Form 990 is an annual reporting return that certain federally tax-exempt organizations must file with the IRS. It provides information on the organization’s mission, programs, and finances.

• The most common error is forgetting or not knowing to file the IRS Form 990. Failing to complete the 990 for three consecutive years can result in losing 501(C)(3) status.
• Incomplete Schedule A, the section of the form that requires charities and certain types of charitable trusts to list the salaries and benefits awarded to top officials and to top-paid independent contractors. This part of the form also focuses on advocacy activity and contains additional questions not covered on the Form 990 itself.
• Failing to note primary exempt mission as required in the statement of program accomplishments.
• Arithmetic errors account for about 20% of all 990 tax returns.
• Not having the signature of any of the organization’s officers.
• Failure to attach required supporting schedules.
• Not listing the correct tax year.

There is no one date on which all Forms 990 must be submitted to the IRS. Instead, a nonprofit’s filing date is determined by the end of its fiscal year (the 12-month period for which the organization plans the use of its funds). Your Nonprofit Form 990 and IRS Form 990-N filing requirements are due by the 15th day of the 5th-month after the end of the fiscal year. For example, if the organization’s fiscal year ends on December 31, these are the filing and extension dates:

Most federally tax-exempt organizations, except churches (unless they claim unrelated business income) and state institutions. Browse the IRS guidelines or chat with us to learn more.

IRS Publication 557 – Tax-Exempt Status for Your Organization, establishes an 85% of the gross income requirement. This requirement is that the exempt organization must “. . . receive 85% or more of their gross income from their members for the sole purpose of meeting losses and expenses.” This 85% rule applies to ALL exempt organizations, not just 501(c)(4) social welfare organizations.

Yes. An exempt organization must establish an accounting system capable of tracking the source of income and payment of that income. The system should also identify those expenses directly connected to the production of income by source.

The tax rates are the same as those that apply to regular corporations on Form 1120. However, an exempt association files Form 990-T to report unrelated business taxable income.

Most associations, simply by the nature of their operations, will not pay any significant income tax. This is because there is usually no net taxable income resulting from unrelated business activities after allocating expenses. Learn more about unrelated business income tax (UBIT) and your nonprofit when you speak with one of our nonprofit specialists.