Tax Filing for Non-Profits
Like forprofit companies, nonprofits and tax-exempt organizations usually have to file an annual tax return. Tax-exempt organizations may be subject to penalties if they do not file a return timely. If they fail to file a return for three years in a row, they may even lose their tax-exempt status.
In certain situations, tax-exempt organizations do not need to file a return. For example, if the nonprofit does not have more than $25,000 in gross receipts, filing a tax return may not be required. Here are some stipulations on who must file and with what:
- If receipts amount to less than $50,000, the organization should file Form 990-N.
- If receipts fall below $200,000 and the organization has less than $50,000 in total assets, the organization can file using a 990EZ.
- If gross receipts amount to $200,000 or more or of the total assets and are equal to or greater than $500,000, the organization should file a Form 990.
- Private foundations should file using a 990-PF regardless of financial status.
The 990-N is sometimes referred to as the Electronic Notice or e-Postcard. Filers can fill out this form on the IRS’s website. There is no paper form. You must first register with the IRS to use this service, but you will only need to register once. Those that qualify to file with a Form 990-N but do not wish to file online can also file using a 990EZ in place of the Electronic Notice.
Depending on the organization, additional forms may be required. Generally speaking, churches, conventions, or associations of churches, and organizations that would be included in a group return are not required to file a 990.
Important Dates for Nonprofit Tax Returns
The due date for nonforprofit returns varies depending on the organization’s taxable year. Many organizations operate on a calendar tax year, which means the tax year begins on January 1 and ends on December 31, but this is not always the case. A tax year can start at any point in the year and must last 12 consecutive months.
An organization’s bylaws may indicate the tax year it uses, or it may be included on the federal tax-exempt status form. It can also be found on the SS-4, which is the form that tax-exempt organizations use to obtain an employee identification number.
Generally, the due date will be the 15th day of the 5th month following the close of the tax year. For example, if the tax year ends on December 31, the initial return due date will be May 15. If the due date falls on a weekend or a legal holiday, the actual due date will be the following business day.
Extensions are available if your organization needs to file a return late. To read more on how to request an extension, vist business and nonprofit extensions.