Nonprofit Tax Season FAQs
“In this world, nothing can be said to be certain, except death and taxes.” – Benjamin Franklin
Our friend Ben is right. No one is immune to death nor taxes. And just because your organization is a nonprofit doesn’t mean you’re dismissed from filing tax returns. If you’re a nonprofit and this is news to you, don’t fret. We’re here to help. Here are some answers to common tax season FAQs:
I have a tax-exempt nonprofit. Do I have to file a tax return?
While tax-exempt organizations don’t pay any federal income taxes, almost all nonprofits must submit a Form 990 to the IRS.
“Almost all?” Which organizations don’t have to file a Form 990?
There are a few, like some religious institutions, government, and political organizations. If you’re not sure, it’s best to check with a knowledgeable advisor. (Don’t have one? Feel free to schedule a quick call with us to get some advice.)
What is Form 990?
It’s a form that the IRS uses to ensure that nonprofits aren’t misusing funds. It helps them accurately evaluate a nonprofit’s finances, programs and more. There are three types of forms:
- Form 990 EZ – If gross receipts are less than $200,000 and total assets are less than $500,000.
- Form 990 – If gross receipts are less than or equal to $200,000 or total assets are less than or equal to $500,000.
- Form 990-N – If gross receipts are greater than or equal to $50,000.
When do we file a Form 990?
The form is due on the 15th day of the 5th month after the end of your nonprofit’s fiscal year. So, if you go by a calendar fiscal year, your nonprofit’s return is due on May 15th.
What happens if I file my Form 990 after the due date?
There are penalties for filing late. The fees depend on your organization’s gross receipts. If they are less than $1,000,000, you’ll have to pay a $20 fee for each day the return is late, with a maximum penalty of $10,000 (or 5% of the organization’s gross receipts, whichever is less.) If your gross receipts are more than $1,000,000, you’ll have to pay $100 a day, with a maximum penalty of $50,000.
Can I file for an extension?
Yes, you can file a Form 8868. It extends the amount of time you have to file by six months.
What happens if I don’t file a Form 990 at all?
If you fail to submit your Form 990 for three consecutive years, your nonprofit will lose its tax-exempt status. So, if you have a 501(c)(3), you can no longer accept tax-exempt donations.
I don’t have time for this tax season stuff! How can I get help?
Don’t be daunted. If you need a hand with preparing your Form 990, give us a shout. We’ve helped many nonprofits with their accounting needs, and we’d be happy to help you too. Get in touch today.
Non Profit Accounting Solutions
Qbix's goal is to provide the latest cloud-based accounting technology while delivering real-time visibility into your nonprofit's financials 24/7. Numbers are our passion, but providing your nonprofit with the financial expertise needed to facilitate growth and profitability is our top priority. And because no two organizations are the same, Qbix offers the flexibility you need to accomplish your nonprofit's goals.
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