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Your Guide to 990s: What are they and which do you need to file?

By June 14, 2023October 12th, 2023No Comments

What is the Form 990?

You may have heard of the IRS Form 990, a tax filing that most federally tax-exempt organizations (also called nonprofit organizations) are obligated to complete every year. But what is it, really, and why is it important? And which does your nonprofit need to file?

A 990 is an informational tax form that the IRS uses to keep track of your nonprofit organization’s activities, governance, and its financial information in detail. These forms allow the IRS to evaluate which organizations are still qualified for 501c3 status and keep up with their reporting obligations. In a way, form 990 tells the IRS that your organization has continued to follow IRS guidelines as it accomplishes its mission. In other words, it essentially tells the IRS that you’re following the rules and should still be considered charitable.

Consequently, 990s (or the lack of filing them) also tell the IRS which organizations are not maintaining their tax-exempt status. According to the attorneys at Charitable Allies, if an exempt organization fails to file its 990s in a timely manner for three consecutive years, its exempt status is automatically revoked by the IRS. Note that “timely” means the Form 990 filing must be received by the IRS by the deadline, as they’ll commonly treat the return as late otherwise (even though the IRS is supposed to treat the postmark date as the filing date). 

In summary—keeping up with your 990s is important! Getting your 501c3 status revoked can prevent you from applying for grant funding, obtaining gifts from companies, and securing funding from donors. And successfully filing your 990s shows your organization is both responsible and transparent, since the information is made accessible to the public. Having your 990s filed correctly and on time shows potential corporate and individual donors that your charity is legitimate, providing them with extra peace-of-mind when donating.

Which Form 990 Should My Nonprofit File?

There are a four common version of Form 990:

  1. The full 990 form
  2. The 990-EZ
  3. The 990-N (otherwise known as the e-Postcard)
  4. The 990 PF

We’ll break down some of the differences between each type below. No matter which form is right for your nonprofit, our nonprofit bookkeepers are happy to help complete the correct form 990 so you can ensure your nonprofit keeps its tax exempt status. 

The Full 990 Form

This is the full-length form for larger nonprofits. It’s a thorough breakdown of the organization’s financial records for the year, and it’s required for nonprofits who gross $200,000 or more in total receipts, or if total assets equal $500,000 or more. It will likely take a substantial amount of time to complete, so our tip for nonprofit leaders is to prepare in advance and keep easily accessible records of the information the IRS will ask for.

In addition to the in-depth financial reporting, the full form 990 asks for a summary about the organization, a section outlining its governance, compensation for paid officers, staff members, etc. 

Here are some of the questions that will appear on the form. 

  • Did the organization undertake any significant program services during the year which were not listed on the prior Form 990 or 990-EZ?
  • Did the organization make any significant changes to its governing documents since the prior Form 990 was filed?
  • Did the organization have unrelated business gross income of $1,000 or more during the year?
  • Did the organization have a written whistleblower policy? 
  • Did the organization have a written conflict of interest policy?
  • Were the organization’s financial statements compiled or reviewed by an independent accountant?

As you can see, the questions have a broad range, asking details about everything from donations to governance. In total, the full form 990 is typically several pages long once completed. 

The 990-EZ

If an organization has gross receipts less than $200,000 and total assets at the end of the year less than $500,000, it can file Form 990-EZ, instead of Form 990. This form is only four pages long compared to the full 990 form, but don’t be fooled by its size! The 990-EZ still requires detailed financial information like revenue and expenses, balance sheets, and more. 

The various sections in the 990-EZ also include questions regarding the organization’s activities and accomplishments. Be prepared to list any contractors as well. 

The 990-N (Also known as the 990 Postcard)

Nonprofits who brought in less than $50,000 in total gross receipts and under $50,000 in the year file the 990-N, the simplest of the four. You’ll file this form on the IRS website by setting up a 990-N profile and completing the “e-Postcard” online. It’s one page and can only be submitted electronically. 

Among other relatively straightforward questions, the 990-N will ask for your EIN and the legal name of your organization, confirmation of total gross receipts, and the name and address of your principal officer. 

The 990-PF

The 990-PF is for private foundations only (hence the acronym) regardless of size. It’s unique from the other forms, and the IRS has plenty of guidelines regarding who should file for this 990. Not sure if you’re a public charity or a private foundation? You can learn more about the differences through our friends at Charitable Allies! 

Additional Tips

  • Form 990 is due on the 15th day of the 5th month following the end of the organization’s taxable year – so get ahead of the IRS’s deadlines! If your organization operates on a calendar year like most nonprofits, this means your form is due on May 15th. But if your organization does not operate on the calendar year, your due date will be different. This is most commonly for universities and other academic organizations that tend to run on the school year format instead of the calendar year.
  • To reiterate, the information on the 990s you file will be public, so it’s a good idea to have your board review each one for accuracy before it’s filed. Potential grantors and donors will have access to the information in your form 990, so keep this in mind.
  • Once you know what information the IRS expects on your 990, begin collecting those numbers throughout the year and store them in an accessible location for later. For example, keep track of any changes in governance and compensation for employees. If you’d like assistance setting up your financial software or you’d like our best practices guide, contact us for more information.

Finally, if you’re still unsure about which 990 to file or simply want someone else to handle the process, reach out to us. Donors and grantors want to know your organization is responsible before giving to your cause, so filing 990s is an important part of running a nonprofit. We’re here to help so you can avoid publicly losing your 501c3 status—and focus more time and energy on your mission.