As a nonprofit organization, you are required by the IRS to file an annual financial information return called the IRS Form 990.
IRS Form 990
The information in the IRS Form 990 gives the IRS an overview of your organization’s activities, governance and detailed financial information.
It is also used by government agencies to prevent organizations from abusing their tax-exempt status. Form 990 also includes a section for your nonprofit to outline its accomplishments in the previous year to justify maintaining your tax-exempt status.
So, unless you are a church, or are affiliated with a church, or your organization’s sole mission is religious in nature, you must file a 990. The size of your nonprofit, based on your gross revenue and assets determines the 990 form you need to file.
Criteria For Filing Form 990
- If your gross revenue is less than $50,000 you have the option of filing a shorter alternative form called the 990-N. Form 990-N is referred to as an “e-postcard” since it can only be filed online, does not include a detailed financial report and only requires minimal information.
- If your gross revenue is less than $200,000 and your assets are less than $500,000, you have the option of filing a 990-EZ. The 990-EZ form includes reporting on revenue, expenses and changes to net assets, along with summary balance sheet data, but does not require the breakdown of expenses by functional area.
- If your gross revenue is greater than $200,000, or you have assets greater than $500,000 you must complete the Form 990.
Form 990 includes a description of your mission or other significant activities. You must also disclose financial details on your nonprofit’s revenue, expenses, assets and liabilities. The IRS also wants to ensure that your nonprofit is worthy of maintaining its tax-exempt status and requires more details on the types of activities you engage in during the year.
There are other attachments to Form 990 that provides a detailed checklist of supporting information, including a the Schedule A – Public Charity Status and Public Support, the Schedule B – Schedule of Contributors, which is a listing all contributions it receives during the year.
Be sure to consult with a knowledgeable tax professional who has nonprofit experience. This is necessary to ensure you are compliant with the IRS regulations filing the Form 990. If your organization fails to file the appropriate Form 990 for three consecutive years, you risk having your tax-exempt status revoked by the IRS. For further insight, browse our library of articles on Nonprofit Fund Accounting.
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