What Nonprofits Must Report to the IRS - dummies

What Nonprofits Must Report to the IRS

By Stan Hutton, Frances Phillips

The formal name of the report that nonprofit organizations must file annually is Return of Organization Exempt from Income Tax, and the IRS calls it the “annual information return.” Everyone else refers to it as “the 990.” It is IRS Form 990, after all.

Depending on a nonprofit’s gross receipts and total assets held, a version of this report must go to the IRS each year. The IRS made substantial revisions to its reporting requirements beginning with the 2008 tax year.

The IRS uses gross receipts to determine which 990 Form your organization is required to file. Gross receipts refers to all funds that come into the nonprofit during the tax year before any expenses are subtracted.

For example, if you have a special event that brings in $20,000, but you have expenses of $8,000 for a net income of $12,000, your gross receipts for that event are $20,000. This figure is added to grants, fees for services, contributions, and any other income to determine your gross receipts for the year.

No matter what report you file, it must be postmarked no later than the 15th day of the fifth month after the end of your annual accounting period: in other words, after the close of your fiscal year. When you filed your application for exemption, you selected your accounting period. If you use the calendar year as your fiscal year, your 990 has to be sent on May 15.

You can apply for an automatic three-month extension. If you need even more time, you can apply for an additional three-month extension — if you have a good reason.

The IRS has three versions of the 990: The 990-N, the 990-EZ, and the long Form 990. The report you file depends on the total gross receipts (and total assets) of your nonprofit organization. If your nonprofit organization is big enough to require filing the long Form 990, seek professional help.