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Federal Filing Requirements for Nonprofits

Form 990

A section 501(c)(9) voluntary employees’ beneficiary association must use its own EIN and not the EIN of its sponsor. If the organization operates under a name different from its legal name, enter the alternate name on the “Doing Business As” (DBA) line. If multiple DBA names won’t fit on the line, enter one on the line and enter the others on Schedule O (Form 990). Use Form 8868, Application for Automatic Extension of Time To File an Exempt Organization Return, to request an automatic extension of time to file. For the latest information about developments related to Form 990 and its instructions, such as legislation enacted after they were published, go to

  • Organizations that file Form 990 must make it publicly available for a period of 3 years from the date it is required to be filed (including extensions) or, if later, is actually filed.
  • Organizations must report compensation for both current and former officers, directors, trustees, key employees, and highest compensated employees.
  • See also Deferred compensation, Nonqualified deferred compensation, and Reportable compensation.
  • In other words, the payment is recorded on line 1e if the general public receives the primary and direct benefit from the payment and any benefit to the governmental unit is indirect and insubstantial as compared to the public benefit.
  • This includes the employer’s share of social security and Medicare taxes, the federal unemployment tax (FUTA), state unemployment compensation taxes, and other state and local payroll taxes.

The 990-N is an electronic form that requires only the EIN, tax year, legal name and address, name of principal officer, website address, and confirmation via checkbox that the annual gross receipts are $50,000 or less. Organizations with gross receipts less than $200,000 and assets less than $500,000 are eligible to file 990-EZ which is an abbreviated version of the full Form 990. If gross receipts or assets are over $200,000 or $500,000, respectively, the full Form 990 must be filed.

Understanding Nonprofit Financial Statements and the Form 990

If the request is made in writing, the notice must be provided within 7 days of receiving the request. Organizations must report compensation for both current and former officers, directors, trustees, key employees, and highest compensated employees. The distinction between current and former such persons is discussed below.

United Way and similar federated fundraising organizations should report grants to member or participating agencies on line 1. Organizations must report voluntary grants to state or local affiliates for specific (restricted) purposes or projects on line 1. However, report expenses related to the production of program-related income in column (B) and expenses related to the production of rental income on Part VIII, line 6b. Rental expenses incurred for the organization’s office space or facilities are reported on line 16. The usual items included in cost of goods sold are direct and indirect labor, materials and supplies consumed, freight-in, and a portion of overhead expenses.


If the organization didn’t receive a contribution of a car, boat, airplane, or other vehicle, leave line 7h blank. If a donor makes a payment in excess of $75 partly as a contribution and partly in consideration for goods or services provided by the organization, the organization must generally notify the donor of the value of goods and services provided. Note that a significant disposition of net assets may result from either an expansion or contraction of operations. Organizations that answer “Yes” on either of these questions must also check the box in Part I, line 2, and complete Schedule N (Form 990), Part I or Part II. Answer “Yes” and complete Schedule K (Form 990) for each tax-exempt bond issued by or for the benefit of the organization after December 31, 2002 (including refunding bonds) with an outstanding principal amount of more than $100,000 as of the last day of the organization’s tax year. For this purpose, bonds that have been legally defeased, and as a result are no longer treated as a liability of the organization, aren’t considered outstanding.

Form 990

Answer “Yes” if, during the year, the organization was required under the Uniform Guidance, 2 C.F.R. Part 200, Subpart F, to undergo an audit or audits because of its receipt of federal contract awards. The Uniform Guidance, 2 C.F.R. Part 200, Subpart F, requires states, local governments, and nonprofit organizations that spend $750,000 or more of federal awards in a year to obtain an annual audit. Provide an explanation on Schedule O (Form 990) (1) if the organization changed its method of accounting from a prior year, or (2) if the organization checked the “Other” accounting method box. On line 23, enter the total amount of secured mortgages and notes payable to unrelated third parties that are secured by the organization’s assets as of the end of the tax year.

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Political Organizations

A party, committee, association, fund or other organization organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function. Charitable Organizations — IRC 501(c)(3)

Organizations that are organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, educational or other specified purposes. All of that information and more can be found on the 990, making this form useful for anyone researching nonprofits. That fact makes it even more important that a nonprofit spend adequate time and energy to fill out their 990 carefully and on time. The 990, which must be made public , also provides an easy way for donors and other people interested in supporting a particular cause to find and evaluate the best charities to support.

A section 501(c)(7) organization can receive up to 35% of its gross receipts, including investment income, from sources outside its membership and remain tax exempt. Part of the 35% (up to 15% of gross receipts) can be from public use of a social club’s facilities. Section 501(c)(7) organizations (social clubs) and section 501(c)(15) organizations (insurance companies) apply the same gross receipts test as other organizations to determine whether they must file Form 990 or 990-EZ. However, section 501(c)(7) and section 501(c)(15) organizations are also subject to separate gross receipts tests to determine whether they qualify as tax exempt for the tax year.

Charities and Nonprofits

For each person listed in column (A), estimate the average hours per week devoted to the organization during the year. Don’t include statements such as “as needed,” “as required,” or “40+.” If the average is less than 1 hour per week, then Law Firm Accounting and Bookkeeping: Tips and Best Practices the organization can enter a decimal rounded to the nearest tenth (for example, 0.2 hours per week). For certain kinds of employees and for retirees, the amount in box 5 of Form W-2 can be zero or less than the amount in box 1 of Form W-2.

  • Organizations that answer “Yes” on either of these questions must also check the box in Part I, line 2, and complete Schedule N (Form 990), Part I or Part II.
  • Enter the total expenses incurred by the organization in conducting meetings related to its activities.
  • For purposes of the excise tax on excess business holdings under section 4943, a donor advised fund is treated as a private foundation.
  • However, if the tenant’s activities aren’t program related, report the rental income on Part VIII, line 6a, and related rental expenses on Part VIII, line 6b.

Also report here any revenue that is excludable from gross income other than by section 512, 513, or 514, such as interest on state and local bonds that is excluded from tax by section 103. The following chart explains which officers, directors, trustees, key employees, and highest compensated employees must be reported on Form 990, Part VII, Section A, and on Schedule J (Form 990). See also Line 5, later, for additional individuals who must be reported on Schedule J (Form 990), Part II.

Charitable Contributions

Generally, under section 170, the deductible amount of a contribution is determined by taking into account the FMV, not the cost to the charity, of any benefits that the donor received in return. However, the cost to the charity may be used in determining whether the benefits are insubstantial. Required of the donee of charitable deduction property who sells, exchanges, or otherwise disposes of donated property within 3 years after receiving it. The form is also required of any successor donee who disposes of the charitable deduction property within 3 years after the date that the donor gave the property to the original donee. Used to report social security, Medicare, and income taxes withheld by an employer and social security and Medicare taxes paid by an employer. Section 4958 doesn’t apply to any fixed payment made to a person pursuant to an initial contract.

Form 990

An organization can still comply with section 4958 even if it didn’t establish a presumption of reasonableness. In some cases, an organization may find it impossible or impracticable to fully implement each step of the rebuttable presumption process. In those cases, the organization should try to implement as many steps as possible, in whole or in part, in order to substantiate the reasonableness of benefits as timely and as well as possible. If an organization doesn’t satisfy the requirements of the rebuttable presumption of reasonableness, a facts and circumstances approach will be followed, using established rules for determining reasonableness of compensation and benefit deductions in a manner similar to the established procedures for section 162 business expenses. An economic benefit isn’t treated as consideration for the performance of services unless the organization providing the benefit clearly indicates its intent to treat the benefit as compensation when the benefit is paid. See the instructions for Form 4720, Schedule I, for more information regarding these disqualified persons.

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