It’s alright to admit that you aren’t a fan of tax season. Unless you’re a tax-fiend like the AA Tax & Accounting Services, LLC team, you probably dread the tax deadline. That’s where we can help.
Filing a tax return can be complicated for business owners, including nonprofit organizations. If you own or manage a nonprofit organization, you may wonder if you are exempt from filing a tax return or what needs to be filed come tax season.
Although most tax-exempt nonprofit organizations do not pay federal taxes, nonprofit organizations are still required to file an IRS Form 990, an annual information return, with the Internal Revenue Service. This form demonstrates to the IRS that your nonprofit organization is fulfilling its purpose. Not sure where to get started with filing an IRS Form 990?
Keep reading as AA Tax & Accounting Services, LLC explains what an IRS Form 990 is and the various stipulations related to filing it.
What Is an IRS Form 990?
An IRS Form 990 is a reporting form that federally tax-exempt nonprofit organizations must file with the Internal Revenue Service each year. The form’s purpose is to provide the IRS with important information about the nonprofit that allows them to evaluate the organization’s mission, programs, and finances.
The Types of Form 990s
There are various types of Form 990s that a nonprofit may be required to fill out depending on the filing year and financial standing, including Form 990, 990-EZ, and 990-N. Here is a breakdown explaining when each type of Form 990 should be used based on assets, gross receipts, and public charity status:
- Form 990 can be filed by larger nonprofit organizations with gross receipts of more than $50,000.
- Form 990-EZ is a shorter version of Form 990 for nonprofit organizations with total receipts of $100,000 and fewer than $250,000 in assets.
- Form 990-N is required for small-scale nonprofits with gross receipts less than $50,000.
Is Filing a Form 990 Required?
Certain types of nonprofit organizations are exempt from filing an annual tax return, including:
- Branches of other nonprofits
- Government corporations
- State organizations providing essential services
- Small nonprofit organizations (yearly incomes of $25,000 or less)
- Nonprofits that have not yet applied for exemption from federal income tax
- State institutions providing essential services
- Churches and other faith-based organizations
When Is the IRS Form 990 Due?
Any nonprofit organization required to submit a Form 990 to the Internal Revenue Service must be submitted by the 15th day of the 5th month after the end of the organization’s taxable year.
If your nonprofit fails to file a Form 990 with the IRS three years in a row, the organization will lose its tax-exempt status with the Internal Revenue Service. There is no appeal process if this happens, and it would then require your nonprofit organization to pay income taxes, which is why your nonprofit must submit your Form 990 each tax season properly.
Tax Consulting for Nonprofit Organizations in Cedar City, Utah
Tax season is stressful for many businesses, including nonprofit organizations. We recommend consulting certified public accountants like AA Tax & Accounting Services for help navigating tax season so you can rest easy knowing your Form 990 has been submitted correctly.
For nonprofit tax services in the Cedar City, Utah, area, you want a team backed with years of experience in the nonprofit world. The AA Tax & Accounting Services team can help you execute the right tax strategies for your nonprofit organization. Contact us to schedule an appointment.