It’s the most dreaded time of year by many. Long, mind-numbing forms. Checking, double checking and triple checking. Searching and searching until you find the right documents. That’s right, it’s tax time. “But I’m a tax-free organization,” you say with pride. Ah, and if only you were exempt from the dreaded forms.
But cheer up, fellow form-haters. Form 990 doesn’t have to be all bad. Follow this step-by-step process to have your Form 990 done in no time.
Do I have to?
You did it when you were a kid, and if you have children you’ve probably heard them say it. Your mom tells you to do something so absurd you think it must be some sort of joke. And then, you ask, with a look of disgust on your face…“Do I have to?”
The hard truth is, every organization that has 501(c)(3) status is required to file a Form 990, regardless of income, with a few exceptions. If you are unsure if you should file a Form 990, the Internal Service Revenue (IRS) offers a list of qualifications to see if you should file.
Which do I file?
The names seem confusing, but it’s actually simple to figure out which form you need to file. Find which requirements you meet to see which version of Form 990 you should fill out.
If your gross receipts for the fiscal year were less than $200,000, and your total assets were less than $500,000, then this is the form for you.
If your gross receipts were greater than or equal to $200,000, and your total assets were greater than or equal to $500,000, then choose this form.
If your gross receipts were less than or equal to $50,000 then this form is yours. Different from most forms, this one is filed as an e-postcard.
Before the filing
Before you get to the form, make sure you have important information readily available, such as your Employer Identification Number (EIN), your tax period and your Group Exemption Number (GEN). You’ll also need to fill out any required schedules of your organization. Two of the major schedules are:
Every 501(c)(3) organization needs to file this schedule. It tells more about what type of organization you are, such as a government, education or community safety organization. You’ll also list your public support on this form such as where your grants and gifts come from.
This schedule is based off of your contributors. The general rule is that if your nonprofit received more than $5,000 from any one contributor, you’re required to fill out this schedule.
These schedules are the most popular, but there are other schedules that might fit your nonprofit’s niche. The IRS has a list of 990 schedules and explanations to see if you should fill them out.
Filling it out
Now that you’ve come this far, it’s time to actually fill out the form. There are some simple pieces of information that you’ll need to have. For example, make sure you have a list of your income and where you received that income. The form will ask you to break down your expenses between program, management and fundraising expenses. If you’ve been keeping track all year, you won’t break a sweat filling out your form.
Remember that Form 990 is more detailed than a regular tax form, because the purpose is different. Potential donors can look at this form and make decisions on whether to donate or not. That means when the form asks you for a list of programs and descriptions of how much money you spend on them, you should be thorough and honest. The form will ask you to identify yourself as a public or private organization. And finally, you will need to list all of your board members and how much the top staff member gets paid. Remember that there are more items on the list, but these are the most important items you’ll need to know.
Need more help?
If you are unsure about any aspect of your Form 990, there are a multitude of resources available to help. Many accountants offer reasonably priced services for preparing the nonprofit forms—so don’t hesitate to call an accountant to ask questions if you are doubting any section of your Form 990. Also, don’t be afraid to hop on the computer and search for online help guides to answer your questions, such as GuideStar or the IRS Instruction Sheet.
Have you filed your Form 990 yet? What has been your biggest struggle?