What Form 990 Do You Need? A Nonprofit Guide

A significant portion of the form requires information on how the organization is governed, and specifically requests the names of its officers, directors, highly compensated employees and other employees who are involved with managing the organization. An organization that over-compensates its management may jeopardize its tax-exempt status with the IRS. Form 990 is the IRS tax form filed by the majority of 501(c)(3) organizations each year to maintain their tax-exempt status.

If the filing organization reports compensation on this basis, it must explain in Schedule O (Form 990) and state the period during which the related organization was related. An individual that isn’t an employee of the organization (or of a disregarded entity of the organization) is nonetheless treated as a key employee if she or he serves as an officer or director of a disregarded entity of the organization and otherwise meets the standards of a key employee set forth above. See Disregarded Entities, later, for treatment of certain employees of a disregarded entity as key employees of the organization. Report compensation on Form 990, Part VII, for the calendar year ending within the organization’s fiscal year, including that of current officers, directors, and trustees, even if the fiscal year is used to determine which such persons must be listed in Part VII.

How Instrumentl Can Extract Insights from Form 990s and Help You Win More Grants

If the organization doesn’t file a complete return or doesn’t furnish correct information, the IRS will send the organization a letter that includes a fixed time to fulfill these requirements. After that period expires, the person failing to comply will be charged a penalty of $10 a day. The maximum penalty on all persons for failures for any one return shall not exceed $5,500. Alternatively, if a taxpayer, including a tax-exempt entity, has not yet adopted an accounting method for an item of income or deduction, a change in how the entity reports the item is not a change in accounting method. In this case, the procedures applicable to requests for accounting method changes (for example, the requirement to file a Form 3115) are not applicable. Section 501(c)(7) and 501(c)(15) organizations apply the same gross receipts test as other organizations to determine whether they must file Form 990, but use a different definition of gross receipts to determine whether they qualify as tax exempt for the tax year.

For each fundraising event, the organization must keep records to show the portion of any payment received from patrons that isn’t deductible; that is, the retail value of the goods or services received by the patrons. If the organization submits supplemental information or files an amended Form 990 or 990-EZ with the IRS, it must also send a copy of Illinois Income Tax Brackets 2023 the information or amended return to any state with which it filed a copy of Form 990 or 990-EZ originally to meet that state’s filing requirement. If a state requires the organization to file an amended Form 990 or 990-EZ to correct conflicts with the Form 990 or 990-EZ instructions, the organization must also file an amended return with the IRS.

Arts, Entertainment, and Recreation

Contributions are reported on line 1 regardless of whether they are deductible by the contributor. The noncash portion of contributions reported on lines 1a through 1f is also reported QuickBooks for Small Business: Which Version Do You Need? on line 1g. The officer receives no compensation in the capacity as a former director or trustee of X, and no unrelated organization pays the officer for services provided to X.

• Enter the amount of initiation fees, capital contributions, and unusual amounts of income included in Part VIII.
• Enter the amount of federal, state, and local payroll taxes for the year but only those taxes that are imposed on the organization as an employer.
• Enter on lines 11a through 11g amounts for services provided by independent contractors for management, legal, accounting, lobbying, professional fundraising services, investment management, and other services, respectively.
• Enter amounts for the use of office space or other facilities, including rent; heat, light, power, and other utilities expenses; property insurance; real estate taxes; mortgage interest; and similar occupancy-related expenses.

It also doesn’t include hospital facilities that are operated by entities organized as separate legal entities from the organization that are taxable as a corporation for federal tax purposes (except for members of a group exemption included in a group return filed by an organization). Enter all other contributions, gifts, and similar amounts the organization received from sources not reported separately on lines 1a through 1e. This amount includes contributions from donor advised funds (unless the https://intuit-payroll.org/the-founders-guide-to-startup-accounting/ sponsoring organization is a related organization) and from gaming activities. For a section 501(c)(21) trust, enter the total contributions received under section 192 from the coal mine operator who established the trust. If the return is a final return, report the compensation that is reportable compensation on Forms W-2 and 1099 for the short year, from both the filing organization and related organizations, whether or not Forms W-2 or 1099 have been filed yet to report such compensation.

Data Processing, Web Search Portals, and Other Information Services

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Enter the employer’s share of contributions to, or accruals under, qualified and nonqualified pension and deferred compensation plans for the year. The organization should include contributions made by the filing organization, common paymasters, and payroll/reporting agents to the filing organization’s sections 401(k) and 403(b) pension plans on behalf of employees. However, it shouldn’t include contributions to qualified pension, profit-sharing, and stock bonus plans under section 401(a) solely for the benefit of current or former officers, directors, trustees, key employees, or disqualified persons, which are reportable on line 5 or 6. These can include persons who meet some but not all of the tests for key employee status.

Your Form 990 deadline

Organizations that report more than $15,000 total on lines 1c and 8a must also answer “Yes” on Part IV, line 18, and complete Part II of Schedule G (Form 990). An “institutional trustee” is a trustee that isn’t an individual or natural person but an organization. Organizations must report compensation from themselves and from related organizations, which generally consist of parents, subsidiaries, brother/sister organizations, supporting organizations, supported organizations, sponsoring organizations of VEBAs, and contributing employers to VEBAs.