Are you a 501(c)(3) nonprofit that’s looking to achieve tax-exempt status?
If so, then yes, you have to file the IRS Form 990-EZ, if…
Your organization has less than $200,000 in gross receipts OR less than $500,00 in assets.
The IRS Form 990 is an annual application for 501c3s that want to gain tax-exemption for the fiscal year and there are three versions of the form: Form 990-N, Form 990-EZ, and Form 990.
Each of these form distinctions is dependent on the size of your organization, with the IRS Form 990-EZ serving as a happy medium between micro-nonprofits (990-N filers) and established foundations (Form 990 filers).
So, does your nonprofit organization fall into the category of Form 990-EZ?
And do you want to avoid paying taxes this year?
Now that you know you have to file, here’s why.
Why Do I Need to File the IRS Form 990-EZ?
The short answer: to claim your tax-exemption status.
As we mentioned before, all 501(c)(3)s must apply for tax-exemption status by filing one of the three variations of the IRS Form 990.
Here are the three forms and their requirements:
- Filed by organizations with gross receipts less than or equal to $50,000
- Must be filed digitally.
- Filed by organizations with gross receipts less than $200,000 and total assets less than $500,000.
- Can be filed physically or digitally.
- Filed by organizations with gross receipts more than or equal to $200,000 or total assets more than or equal to $500,000.
- Can be filed physically or digitally.
When a 501(c)(3) nonprofit is created, they’re given the unique ability to apply for tax-exempt status for the fiscal year, however, this status is not deferred automatically.
Tax-exempt status may be a perk of 501(c)(3s), but the opportunity to avoid paying taxes isn’t an automatic right.
The U.S. government requires nonprofit businesses to apply for tax-exempt status and approval isn’t guaranteed.
Although filing the IRS form 990 EZ is faster and more simple than Form 990, the filing process can be difficult. To start, the IRS Form 990-EZ is 4 pages but the penalties are stiff if mistakes are present—ranging from a return-to-sender for resubmission, or in the case of late filings, an outright loss of tax-exemption status & financial fees.
So, if you want to avoid a bill from Uncle Sam this May 15th, file the IRS Form 990-EZ as completely and quickly as possible.
How Do I File IRS Form 990-EZ?
Well, you could start by reading this 100-page instruction manual written by the IRS.
If you’re handling your own paperwork and filing, the IRS will require you to gather all the appropriate forms, schedules, and supplemental documents, then physically mail them here:
Department of the Treasury Internal Revenue Service Center
Ogden, UT 84201-0027
You can just hire an IRS-authorized e-filer to walk you through the documentation process and file them for you.
Life is short, and communicating with the IRS is one of the leading causes of headaches in nonprofit executives. So, let a licensed tax-preparer, take the stress and burden off your shoulders and make Tax-Day feel like just another day in May.
Here Are a Few Things to Remember When Filing
When to file…
The filing date of the IRS Form 990-EZ is one of these two deadlines depending on your organization.
- May 15th if your organization if following the Calendar Tax Year.
- The 15th day of the 5th month after the last month that concludes your fiscal tax year.
- For example, if your fiscal tax year ended in April, you would file your taxes September 15th)
The application is meant to provide a full accounting of the financials and organizational structure of your 501(c)(3) nonprofit to the IRS, so detailed financial statements, an accounting of your complete organizational structure, and other business records will be requested.
Also, depending on your the nature of your nonprofit, you may be requested to provide supplemental documents and information called “schedules.” These schedules are yes or no qualifying questions that may require additional information depending on your answers.
For example, there’s the Schedule of Contributors (a list of all your contributors), Schedule D to provide more detailed financial statements, Schedule F to report your organization’s level of activity outside the United States, and Schedule G to describe your organization’s fundraising activities, just to name a few.
So, do yourself a service and keep accurate records of your organization’s finances, structure, and accounting records. It’ll save you a ton of time in the long run and make the process of filing a whole lot smoother.
And lastly, remember to be honest in the information you provide and as thorough as humanly possible. A filing that’s lacking in necessary information, or one with clear mistakes, will be sent back with a Letter2695C Returning Form 990 due to Missing Information requiring you to resubmit your application to avoid penalties and the loss of your tax-exemption status.
Once you submit your application in the mail, it may be months before you hear back on whether your application has been approved or not—so, it’s best to take the time to get it right on your first attempt.
If you want to get your IRS 990-EZ filing done correctly, on time, and most importantly, approved Click here to contact us directly.