Best strategies in tax reporting for nonprofits

Best strategies in tax reporting for nonprofits G&A Expense allocation

Tax reporting for nonprofits

Being a charitable non-profit does exempt the organization from paying income taxes. However, it is important to file an annual information return every year. Most charitable nonprofits have an obligation to file an annual information return with the IRS. Read on to find out the nitty-gritties from Georgen Scarborough on how to report taxes for nonprofits.

How nonprofits file tax returns

The type of tax return filed by a nonprofit organization depends on its size and type. Learn which Form 990 is applicable for your nonprofit below.

Form 990-N

This is the simplest tax return. Form 990-N applies to small nonprofits with gross receipts of less than $50,000. This form must be submitted by the 15th day of the fifth month following the organization’s tax year.

Form 990-EZ

Nonprofits can submit Form 990-EZ when they meet certain conditions. Firstly, they would have annual gross receipts of less than $200,000, and secondly, assets of less than $500,000. They must report on:

  1.     Revenues, expenses, and changes in net assets. (Part 1)
  2.     Simplified balance sheet (Part 2)
  3.     Statement of program accomplishments (Part 3)
  4.     List of officers, directors, employees, and stakeholders (Part 4)
  5.     Miscellaneous questions (Part 5)
  6.     Only to be filled if the non-profit is exempt under 501 (c) (3) (Part 6)

Form 990

If you are a nonprofit with annual gross receipts of more than $200,000 and assets of $500,000, then you would submit a Form 990. Simply enough, page one of this form is similar to Form 990-EZ. However, Form 990 requires detailed information about the organization as well as additional attachments. This Form is open to the public. So, the organization’s Board or senior-most personnel should review and approve the information.

Not required to file

Certain organizations receive tax-exempt status from the IRS. These include:

  • religious or church-affiliated organizations
  • specific political organizations, or
  • black lung benefit trusts.

These do not need to submit a Form 990.  However, if they are engaged in unrelated business activities, a Form 990-T is required annually.

If you are a charitable nonprofit organization, contact Georgen Scarborough for more information on tax reporting for nonprofits.