What Is a 990 Form?: A Nonprofit’s Guide
Your nonprofit organization may have a tax-exempt status. Unfortunately, that won’t spare you from a yearly filing with the Internal Revenue Service (IRS). Nonprofits are required to submit an annual Form 990 to remain in good standing. Read on for everything you need to know to file your Form 990.
While IRS filings often conjure up images of overly complex documents and confusing jargon, filing a Form 990 for your nonprofit needn’t be burdensome. Below, we’ll cover all the basics you need to know on 990 forms for nonprofits, including:
- Types of 990 Forms for Nonprofits
- Why Is a 990 Form Important?
- 990 Form Deadline
- How to E-File
What is a 990 Form?
In short, a Form 990 is an informational document highlighting your nonprofit’s mission, programs, finances, and accomplishments from the past year. It’s a publicly available filing that the IRS uses to ensure you comply with the laws regulating your tax-exempt status. Since it’s something nearly (we’ll cover the few exceptions below) all charitable nonprofit organizations must complete, you should become familiar with filing a 990 form as soon as you start your nonprofit. The process may seem a bit tedious, but it’s critical for maintaining public trust in charitable organizations.
A nonprofit’s executive director is often responsible for completing a 990 form, though other finance and operations staff may contribute to the effort. It’s also a good idea to require that your nonprofit board reviews and approves your 990 form before you submit it to the IRS. Having an accountant or someone familiar with IRS regulations on your board can help ensure a complete and accurate submission.
Types of 990 Forms for Nonprofits
There are four types of 990 forms for nonprofits. The one you need to file depends primarily on your total gross receipts and assets. However, if your exempt organization type is a private foundation, that will impact which form you use, as well. Additionally, there are a few nonprofit types that are exempt from filing a 990 form, such as churches.
Below are the basic requirements for each 990 form type. For additional details, always make sure to review the most current information on the IRS’s website.
1. Form 990-N (e-Postcard)
The Form 990-N is a filing option for smaller nonprofits with gross receipts of $50,000 or less. It is the simplest of the forms, with just eight questions. You’ll need to be prepared with information like your:
- Nonprofit name
- Employer identification number (EIN)
- Principal officer name and contact information
- Confirmation of tax receipts less than $50,000
Nonprofits that are eligible to submit the Form 990-N may choose to submit a Form 990-EZ or Form 990 instead, but must ensure the documents are complete and submitted on time. One reason you may volunteer to select this option is to create a more detailed public record of your charitable nonprofit’s operations for increased donor accountability.
There are some organizations that are ineligible to file Form 990-N, including private foundations, Section 509(a)(3) supporting organizations, and IRC section 527 (political) organizations. If you have questions about your eligibility for the Form 990-N, you can review the IRS’s frequently asked questions for this form.
2. Form 990-EZ
The Form 990-EZ is a filing option for small- to medium-sized nonprofits with gross receipts that are less than $200,000 and total assets that are less than $500,000. It’s a simpler version of the standard 990 form for nonprofits, around four pages. It requires supplemental information when compared to the Form 990-N, such as:
- Grant funding details
- Balance sheets
- Program accomplishments
Again, nonprofits that qualify for the Form 990-EZ can choose to submit the more detailed Form 990 if they want.
3. Form 990
The Form 990 is the standard filing option for nonprofits. This more detailed version is about eight pages in length. It’s required for nonprofits with gross receipts that are greater than or equal to $200,000 or total assets that are greater than or equal to $500,000.
The standard 990 form asks for the most information. In addition to requests from the Form 990-EZ, you should be prepared to provide details such as:
- Complete financial records
- Annual review of activities
- Summary of your mission and history
4. Form 990-PF
The Form 990-PF is required for all tax exempt organizations that are designated as private foundations, regardless of their financial status. A private foundation is a legal entity established for charitable giving. All of its funding comes from an individual donor, corporate sponsor, or family rather than from public fundraising from outside sources. The private foundation’s funder receives tax benefits for their donations.
Private foundations must use Form 990-PF to report on their assets, trustees, officers, grants, philanthropy, and other financial activities. They do not need to submit any of the other 990 forms for nonprofits in addition to this one.
Why Is a 990 Form Important?
Filing a 990 form each tax year for nonprofits is an important task from an operational standpoint. It’s also important for establishing and strengthening relationships with your donors and other stakeholders.
Operationally, you’ll want to complete your 990 form on time to:
- Comply with IRS regulations and requirements: Nonprofits are legally required to submit a 990 tax form.
- Maintain your tax exempt status: The IRS will revoke your tax exempt status after three consecutive years of not filing a 990 tax form.
- Avoid fines: Late or missing 990 forms face a fine of $20 for each day that they are late, up to $10,000 or 5% of your annual gross receipts.
From a relationships point of view, completing your 990 form is important for:
- Grant funders and corporate sponsors: Many grant applications and corporate sponsorship opportunities ask for you to include a copy of your 990 form. Having incomplete, missing, or late 990 records could put you at a disadvantage when seeking these types of funding for your nonprofit organization.
- Public transparency and trust: The 990 forms that nonprofits file each tax year are publicly available documents. They let anyone have a glimpse at your operations. This not only instills greater stakeholder trust in your nonprofit but also works to cultivate overall public support and trust in charitable organizations.
- Informed donor decisions: By reviewing your 990 form, donors can get a clearer picture of your finances to influence decisions about their gifts. They can see which programs are the most effective or where their funding could make the biggest impact. Most importantly, they’ll see that you’re meeting your reporting requirements and can be trusted with their investment.
- Brand identity: On-time filing of your 990 form shows that you are an organized nonprofit that takes good care of your operations—nourishing a brand identity that’s synonymous with efficient and effective operations signals to your donors that you will treat their gifts with similar attention.
At the end of the day, a 990 form can help your nonprofit get donations. By meeting your operational requirements, you signal to your donors that you run an organization they can trust. You may even consider housing your latest 990 form on your website where donors can give it a quick review as they learn more about your work.
990 Form Deadline
The deadline for your 990 form will depend on your nonprofit’s fiscal year. Nonprofits must file their 990 form by the fifteenth day of the fifth month following the end of their fiscal year. For example, if your nonprofit’s fiscal year follows the calendar year, then your 990 form is due on May 15.
If it’s getting close to the deadline and you don’t think you’ll have the capacity to complete your 990 form on time, you can file for a six-month extension using Form 8868. However, Form 990-N is exempt from being eligible for an extension.
Remember that it’s important to meet your 990 form deadline to avoid penalties and to demonstrate your reliability to your supporters.
How to E-File
Since passage of the Taxpayer First Act of 2019, nonprofits are required to submit their 990 form electronically. The easiest way to do this is to select a nonprofit tax software solution. A tax software solution geared toward nonprofits can:
- Guide you through all the necessary steps of completing a 990 form and fill in the correct pieces of the form with the information you provide
- Securely store and allow you to easily access data from previous years for faster 990 form submissions and more organized recordkeeping
- Minimize human error for more accurate, complete, and timely submissions to the filing organization
There are several software solutions you can choose. As you review your options, consider:
- How intuitive the software is or whether there’s a steep learning curve
- What level of customer support you can expect
- Whether the software is mobile-friendly and can be accessed by all of the team members who will need it
- If the price point fits into your current budget
- How the software can integrate with other apps or programs you use, such as your donation sites, to easily pull relevant data over to your 990 form
Some of the top-rated nonprofit tax software solutions include:
Understand What a 990 Form Is For Smooth Nonprofit Operations and Greater Transparency
So, what is a 990 form going to do for your nonprofit? Completing a 990 form for your tax exempt organization may initially seem like yet another task to pile onto your already busy staff. However, you can use the process to help your team see how this IRS requirement fits into your larger donor cultivation plan.
A 990 form for nonprofits not only allows you to keep your tax exempt status, it also encourages public support towards charitable organizations and brings transparency to your operations. These elements show donors that their investments in your work will be used well. The more nonprofits follow these annual reporting guidelines, the more donors will view the nonprofit sector favorably and give more generously.
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