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.

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