There are several instances of nonprofits particularly, the ones that are reliant heavily upon the work of volunteers, losing their nonprofit status as they fail to fulfill their requirements of annual filing. To protect the tax-exempt, nonprofit status of your organization, you need to file your annual returns each year correctly and carefully in a timely manner. Let’s see some basics regarding Form 990 and how you can approach your nonprofit returns correctly.
A brief guide to filling the annual returns of your nonprofit this tax season
Meeting the Form 990
Form 990 is the foundation of the annual filing of every nonprofit during tax season.
990 form’s multiple variations:
- Form 990-N- for small organizations whose annual receipts are less than $50,000.
- Form 990-EZ- used by nonprofits with less than $200,000 gross receipts and less than $500,000 total assets.
- Form 990- for organizations having $200,000 or more of gross receipts or value of total assets are $500,000 or more.
- Form 990-PF – for private foundations
Where gross profits refer to the total income that is received from all the sources of income before any expenses or costs are deducted.
Nonprofit filing checklist for 2023
The checklist will ensure that you are preparing your nonprofit filing properly.
- Check with the IRS whether your organization needs to file or not.
- Check the money the organization earned during the last applicable tax year and also determine which tax form is needed to file
- Board of directors must review the requirement in Form 990 thoroughly prior to filing
- Seek professional help who is experienced to handle tax-exempt finances. This can relieve stress and ambiguity and greatly expedite the process.
- Collect basic information like the IRS tax exemption status of the organization, Employer Identification Number, all dates and amounts for local, state, and federal estimated tax payments made, the primary exempt purpose and the mission of the organization, and the list of service accomplishments from the organization within the tax year.
- Collect financial and organizational records such as a balance sheet, revenue, and functional expenses, all unrelated business income, all financial statements, reports of fundraising activities, a list of contributions made, any supporting or supported organizations, a list of tax-exempt bonds or applicable grants tec.
- Collect officer information like a list of former or current employers, trustees, and directors.
- Collect records of assets disposed of or acquired during the tax year
- Ensure that the story of the nonprofit will emerge from the filling process clearly, accurately, and soundly.
- Sign your return and make submission on time!