Guide to Form 990: Understanding Nonprofit Tax Filing

Taxes may not be everyone’s favorite subject, but for nonprofits, compliance with Internal Revenue Service (IRS), regulations is essential. IRS Form 990 helps you maintain your tax-exempt status while also being transparent about your use of funds. TaxAct(r), a tax preparation software, can help you fill out your Form 990 without any hassle. To begin, let’s review what Form 990 is and how to fill it out.

At a glance:

• Form 990 helps nonprofits keep their tax-exempt status and demonstrate transparency to donors and the IRS.
• Different versions of the form apply based on nonprofit size and financial activity, such as Form 990-N for small nonprofits or Form 990-PF for private foundations.
• Filing Form 990 requires accurate reporting of revenue, expenses, governance, and program achievements.

What is IRS Form 990?

IRS Form 990 is an information return that tax-exempt organizations, also called 501(c)(3) organizations or charitable organizations, use to report their financial information to the IRS. Your nonprofit must meet certain IRS requirements to be considered a tax-exempt organization.

A 990 form provides transparency about a nonprofit’s activities, gross receipts, and finances, allowing the public and potential donors to see how the organization’s mission is being carried out. Nonprofits must show where they get their money from and how it is spent. The good news is that filing isn’t as difficult as it sounds, especially when you have a partner like TaxAct to guide you through the process. The IRS uses Form 9900 to monitor tax-exempt nonprofits and ensure that they are operating within their exempt purpose. Not only does it help the IRS, but it also shows everyone — from potential donors to the federal government — that your nonprofit is handling its money responsibly.

Versions of Form 990

There are different versions of 990 tax forms to meet the filing requirements of different organizations:

Form 990, Return of Organization Exempt From Income Tax

This is the standard version used by larger nonprofit organizations with gross receipts of $200,000 or more or total assets of $500,000 or more. It provides a comprehensive overview of the nonprofit’s activities, governance, and financial information.

Form 990 is due by the 15th day of the 5th month after the end of your organization’s tax year. For calendar year filers whose tax year ends Dec. 31, the due date is May 15. If you need additional time to complete any of these forms, please use Form 8868 to request an extension. This will automatically give you a six-month extension for filing your Form 990. When you e-file your Form 990 through TaxAct, we can help you complete Form 8868. This ePostcard form is used by organizations who are just starting out, or have limited income. It doesn’t have any accompanying schedules and requires only the following basic information:

Employer identification number (EIN), also known as a taxpayer identification number (TIN)

Tax year (calendar or fiscal filer)

Legal name and mailing address

Any other names the organization uses

Name and address of a principal officer

• Website address (if your organization has one)
• Confirmation that the organization’s annual gross receipts are $50,000 or less
• If applicable, a statement that the organization has terminated or is terminating (going out of business)
• Form 990-N is also due by the 15th day of the 5th month after the end of your organization’s tax year. The deadline for Form 990-N will be pushed forward to the next working day if your due date falls during a holiday or weekend. The form is not subject to penalties, but if you fail three times in a row to file, your organization will lose its tax-exempt status. This version is somewhere in the middle – more comprehensive than Form 990-N, but less detailed than Form 990. It requires information about revenues, expenses and program service accomplishments. It has the same due date and extension requirements as the full 990 form.
• Form 990-PF, Return of Private Foundation
• Private foundations file Form 990-PF, which requires more detailed information than the standard Form 990. Private foundations are required to provide a full accounting of their assets and liabilities, income and grants during the year. The Form 990-PF has the same due date and extension requirements as the full 990 form. Form 990-PF has the same due date and extension requirements as the full 990 form.
• Form 990 example
• Here’s what the first page of the standard Form 990 looks like:

Now, let’s break down each section of the entire form:

Part I

:

Summary.

This section includes information about your nonprofit organization. Here, you’ll describe your organization’s mission, plus information about your total revenue, expenses, total assets, liabilities, and net assets.

Part II

:

Signature Block.

This part requires the signature of an authorized officer, confirming that the information provided is true and accurate to the best of their knowledge.

• Part III: Statement of Program Service Accomplishments. Here, you describe your nonprofit’s mission statement and three most significant achievements during the year. Include detailed descriptions of each program, including total expenses and revenue for each activity. Schedule O can be used if you have more than 3 activities to report. Part IV
• : Checklist for Required Schedules. In this section, there is a checklist that must be completed. Answering Yes/No here will determine the additional schedules that you must attach to Form 990. Answer each question carefully to ensure all relevant schedules are attached.Part V
• : Statements Regarding Other IRS Filings and Tax Compliance. This section includes questions about other tax filings and compliance issues, such as tax deductions and unrelated business income tax (Form 990-T). Make sure to answer accurately, as it shows your compliance with various IRS requirements.Part VI:
• Governance, Management, and Disclosure. This part focuses on your nonprofit’s governance structure, policies, and practices. This section includes information about the board of directors, management, and whether or not certain policies are in place that are not required by Internal Revenue Code. This section is important for demonstrating transparency and good governance practices.Part VII: Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors. This section is important for demonstrating transparency and good governance practices.
• Include the compensation paid to key employees within your organization. Include contractors who receive more than $100,000. Part VIII: Statement Of Revenue. In this section, you must break down the revenue of your nonprofit into categories such as membership dues and fundraising events, grants and non-cash contributions, and program service revenue. (Form 990T). Part IX:Statement on Functional Expenses.
• You categorize your expenses as program services, general management, or fundraising. This breakdown shows how effectively your nonprofit uses funds to support its missions. This section includes assets, liabilities and net assets. Ensure that the information here matches your financial statements. Part XI:
• Reconciliation of Net Assets. This part reconciles the change in net assets from the beginning to the end of the year. It helps verify that the numbers reported in previous sections are consistent.Part XII
• : Financial Statements and Reporting. Here, you indicate whether your financial statements were compiled, reviewed, or audited by an independent accountant. This part also asks if your nonprofit has an audit committee.
• For more detailed instructions on how to complete each line of Form 990, visit the IRS website. Form 990 instructionsIf you’re ready to file Form 990, an easy way to do so is to e-file it with us at TaxAct. Our software allows you to file all the 990 versions listed in this article as well as any accompanying schedules that you may need (more information on this in the next section). Gather your documents: Before you begin, gather all the tax documents and financial statements that your nonprofit organization needs. We have a helpful Form 990 tax checklist that will help ensure you have everything you need to complete the filing process.
• Access TaxAct: Head over to TaxAct Tax-Exempt Organizations. You can download our easy to use tax software here. Answer the interview questions Our program will guide through a series questions about your nonprofit. This includes questions about program service accomplishments and expenses. Complete TaxAct will help determine which schedules you need to complete, such as Schedule A for public support or Schedule B for listing contributors.Review your form
• : Before submitting, carefully review your completed Form 990. Ensure all financial information is accurate, and double-check key sections like total assets, liabilities, and net assets.File electronically: Once you’re satisfied with your return, e-file it directly with the IRS using TaxAct. E-filing is required for most tax-exempt organizations, and our software makes the process simple and straightforward.File an extension if needed
• : If you need more time to file, you can also use TaxAct to file an extension by completing Form 8868.What are Form 990 schedules?Form 990 includes several schedules that may need to be filed, depending on your organization’s activities. Here’s a quick rundown of each schedule and examples of nonprofits that might need to file them:Schedule

Title

Description

Example

1. Schedule APublic Charity Status and Public Support
2. Provides information about public charity status and public support. Required for organizations described in section 501(c)(3), public charities, and certain non-exempt charitable trusts.A community arts organization receiving donations from a wide range of donors.
3. Schedule BSchedule of Contributors
4. Reports contributors of money or property valued at $5,000 (or at least $1,000 for religious contributions).A nonprofit that received multiple large donations from individuals or organizations during the year.
5. Schedule CPolitical Campaign and Lobbying Activities
6. Used by organizations that have an ownership interest in a joint venture conducting political campaign or lobbying activities to report their share of such activity.An environmental group lobbying for policy changes.
7. Schedule DSupplemental Financial Statements

Required to report supplemental financial information such as donor advised funds, art and museum collections, conservation easements, escrow accounts, endowment funds, etc.

A museum reporting on its art collection and donor advised funds.

Schedule E	Schools	Provides information on school policies, facilities, and benefits, as well as other necessary details.	A private K-12 school reporting on its nondiscriminatory policies.
Schedule F	Statement of Activities Outside the United States	Reports activities conducted outside the United States during the tax year.	A nonprofit providing disaster relief in other countries.
Schedule G	Supplemental Information Regarding Fundraising or Gaming Activities	Used to report professional fundraising services, fundraising events, and gaming activities.	A nonprofit hosting a charity auction or bingo night.
Schedule H	Hospitals	For hospital organizations to report activities, policies, and community benefits provided by their hospital facilities and other non-hospital health care facilities.	A nonprofit hospital providing community health services.
Schedule I	Grants and Other Assistance to Organizations, Governments and Individuals in the U.S.	Provides information on grants and other assistance given to organizations, governments, or individuals within the U.S. during the tax year.	A foundation providing grants to local nonprofits.
Schedule J	Compensation Information	Used to report compensation practices, including the compensation of certain officers, directors, trustees, and highly compensated employees.	A nonprofit with highly compensated executives.
Schedule K	Supplemental Information on Tax Exempt Bonds	Provides information on outstanding liabilities associated with tax-exempt bond issues.	A nonprofit that used tax-exempt bonds to finance a new facility.
Schedule L	Transactions with Interested Persons	Reports certain financial transactions or arrangements between the organization and interested persons, including disqualified persons under section 4958.	A nonprofit providing loans to a board member.
Schedule M	Noncash Contributions	Reports types of noncash contributions received, plus related information.	A food bank receiving substantial noncash donations, such as food items.
Schedule N	Liquidation, Termination, Dissolution, or Significant Disposition of Assets	Required for organizations that have gone through significant asset disposals or terminations (more than 25% of net assets).	A nonprofit that closed its operations and disposed of its remaining assets.
Schedule O	Supplemental Information to Form 990	Used to provide additional explanations and more in-depth responses to questions on Form 990 or 990-EZ.	A nonprofit providing additional information on its governance policies.
Schedule R	Related Organizations and Unrelated Partnerships	Provides information on related organizations (including transactions with these organizations) and unrelated partnerships conducting significant activities.	A nonprofit with affiliated entities or a parent/subsidiary relationship with another organization.
Form 990 FAQs	Why is Form 990 important?	Filing Form 990 ensures compliance with IRS regulations, helps maintain your nonprofit’s tax-exempt status, and demonstrates financial accountability to donors and the public.	What happens if my nonprofit doesn’t file Form 990?
If you fail to file Form 990 for three consecutive years, you risk automatically losing your tax-exempt status. Schedule Which version of Form 990 you must file depends on your organization’s financial activity (gross receipts and total assets).	If you’re unsure if you need to file Form 990 for your nonprofit, check the IRS annual exempt organization: who must file page.	Can Form 990 be filed electronically?	Yes! E If you’re ready to get started, you can easily e-file Form 990 using our tax preparation software.
What is public support, and why does it matter?	Public support refers to contributions from a broad base of donors. The Tax After downloading the program, follow our step-by-step guidance to fill out your Form 990 (or one of its versions), plus any schedules.	If you need more time, don’t forget that	TaxAct
also supports	filing an extension	for Form 990 by completing	Form 8868
. ( To file Form 8868 using TaxAct:	From within your TaxAct return (	Online	or Desktop), click

Filing

to expand, then click

File Extension

. On smaller devices, click in the upper left-hand corner, then click

Filing

.

The program will continue with the interview questions to help you complete the required information for an extension request.

The bottom line

Filing Form 990 can initially seem overwhelming, but doing so can be crucial for your nonprofit’s success. Tax Let

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