The 411 on your Form 990
By Anna Baumgardner, CPA | Published on 10/14/2021
In the midst of planning fundraisers and campaigns, searching for expansion opportunities, managing internal staffing, and tracking expenses, the Form 990 is often an afterthought only considered when a potential grantor or lender requests a copy of your most recent 990. In this article, we’ll discuss some of the most frequent questions and points of confusion surrounding this informational filing.
Technically, the 990 is not a tax return, it’s an information return
While non-profit organizations are generally exempt from paying taxes, they’re not exempt from tax-like reporting requirements. You may even hear the terms “tax return” and “information return” interchangeably in reference to non-profit organizations. The Form 990 is an annual return required to be filed with the IRS and, for most non-profit organizations, is a publicly available document. Because the 990 collects information and does not calculate or report any taxes due, the 990 and its derivatives are referred to as information returns.
How do we identify the correct tax year?
Determining the tax year (what year appears on the return forms) for organizations with non-calendar year-ends can be a challenge. To explain this, we must first identify the difference between a fiscal year and a tax year. A fiscal year is the 12-month period for which an organization reports annual results. Different types of organizations are required to use certain year-ends (for example, schools and government organizations use either 6/30 or 9/30 year-ends), but many organizations are free to select whichever 12-month period they prefer. A calendar year is the 12-month period from January 1 to December 31. An organization may choose to use the calendar year as their fiscal year. Feel free to reach out to us to discuss which year-end fits best with your organization!
Where most people “name” a year by the calendar year in which a period ends, the IRS calls for Form 990 years to correlate to the year in which the fiscal year begins. This is most easily illustrated in the table below.
|Calendar Year||Fiscal Year||Tax Year|
|1/1/2019 – 12/31/2019||FY 19||2019|
|1/1/2020 – 12/31/2020||FY 20||2020|
|1/1/2021 – 12/31/2021||FY 21||2021|
|Fiscal Year||Fiscal Year||Tax Year|
|10/1/2019 – 9/30/2020||FY 20||2019|
|10/1/2020 – 9/30/2021||FY 21||2020|
|10/1/2021 – 9/30/2022||FY 22||2021|
In the event you elect to change your year-end, you would prepare a short-year return. Short-year may “overlap” a previously filed or future full-year 990. As a result, you may have two 990s for the same tax year, but for different fiscal periods.
….But we’re in 2021. You’re telling me that the year started in 2019 hasn’t been filed?!….
This brings us to another frequently asked question: what are the original and extended due dates? For non-profits, the Form 990 is due to the IRS 4 ½ months after the fiscal year-end, and may be extended for 6 months after the original due date. See the table below for examples to clarify the original and extended due dates.
|Calendar Year||Tax Year||Original Due Date||Extended Due Date|
|1/1/2019 – 12/31/2019||2019||5/15/2020||11/15/2020|
|1/1/2020 – 12/31/2020||2020||5/15/2021||11/15/2021|
|1/1/2021 – 12/31/2021||2021||5/15/2022||11/15/2022|
|Fiscal Year||Tax Year||Original Due Date||Extended Due Date|
|10/1/2019 – 9/30/2020||2019||2/15/2021||8/15/2021|
|10/1/2020 – 9/30/2021||2020||2/15/2022||8/15/2022|
|10/1/2021 – 9/30/2022||2021||2/15/2023||8/15/2023|
Which Form 990 do we file?
Now that we’ve established your tax year and when the return is due, you’re ready to prepare your return. Which Form 990 is appropriate?
Smaller organizations that normally generate $50,000 or less in gross receipts in the tax year are required to file a minimum of a 990-N, also known as a Postcard 990. This a very simple, consolidated version of the full 990 that is usually more appropriate for the level of activity and complexity of smaller non-profits.
Organizations that generate between $50,000 – $200,000 in annual gross receipts and who have total assets totaling less than $500,000 may choose to file a 990-EZ or a full Form 990 return. However, if the full Form 990 is elected, you must be sure to complete the entire return. Failing to complete the entire return – whichever version is filed – may result in late or failure-to-file penalties.
Organizations that generate gross receipts of $200,000 or more or have total assets greater than $500,000 are required to file a full Form 990.
Private foundations must file Form 990-PF, regardless of gross receipts or total assets.
Finally, there is always an exception to the rule. In the event your organization is involved in unrelated business activities that generate income, your organization may be subject to tax on those activities. This activity and the calculation of related tax are reported on Form 990-T.
Form 990 Nonfinancial Information
Form 990 includes a large amount of non-financial information. One of the main listings included covers key employees and board members. If your board terms or fiscal year do not align with your tax year, it can be very confusing which board members should be included. The board member list should only include those members who were active during the fiscal year being reported. This means that you may end up listing two people for the same position if there was turnover during the year. When sending the listing to your accountant, it’s recommended to include each member’s start and term dates.
A full 990 also requires full descriptions of your largest programs. Since the Form 990 is a publicly available document, this is your opportunity to highlight all of the great things your organization has accomplished during the year! An example of a program that provides necessities and medical care for homeless pets might read:
“Lassie’s House, an animal shelter and volunteer clinic, is committed to providing shelter, food, and veterinary care to animals in need that would otherwise be placed in kill shelters. The program is comprised of 17 volunteer vets and 33 staff members dedicated to rehabbing and rehoming animals. In fiscal year 2X, Lassie’s House placed approximately 350 dogs, 500 cats, and 50 exotics in new forever homes, as well as rehabbed over 70 wildlife specimens for return to their natural habitats. Lassie’s House also sponsors pet behavior and wildlife education clinics for local communities and school districts. These clinics had over 800 attendees in fiscal year 2X.”
Still have questions?
If you would like clarification on any of the topics discussed above or have separate questions regarding your organization’s 990, please reach out to us!