Do nonprofits file annual tax returns?
Previously we pointed out that while nonprofits do not have to pay federal income tax, or any state or local income tax for that matter, they must still pay payroll tax as well as any and all sales and use tax. This means most tax-exempt organizations are required to file annual tax returns with the IRS. But why?
Even though nonprofits don’t pay federal taxes, they are still required to file an informational return with the IRS each year. This annual reporting is done by filing a Form 990 for your nonprofit.
What is an IRS Form 990?
The IRS requires federally tax-exempt nonprofits to file a Form 990 each year. This form allows the IRS (and the general public) to evaluate how a nonprofit is operating and performing with its mission, programs, and finances.
There are three different types of forms: the Form 990, the 990-EZ, and the 990-N.
When is my Form 990 due to the IRS?
It must be completed and filed (postmarked) by May 15. If that date ever falls on a Saturday or Sunday, the following Monday becomes the due date.
How do I know which Form 990 my nonprofit files?
The IRS provides some useful information to help you determine which form to file, but you can reference the bullets below for a quick idea:
- Large nonprofits with gross receipts of more than 50,000 file a Form 990 or 990-EZ
- Small nonprofits with gross receipts of less than 50,000 file a Form 990-N
- Private foundations file a Form 990-PF
What happens if a nonprofit doesn’t file a Form 990?
If an organization neglects to file a Form 990 for three years in a row, the IRS will automatically revoke its 501(c)(3) tax-exempt status. Without this status, a nonprofit organization would be subject to paying income taxes like every other business.
Can I file a Form 990 with Aplos Software?
Absolutely! Below is a recent webinar we did that will help walk you through the process. Plus, you can try the software for free. No credit card needed.
