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Can I DIY My Nonprofit Tax Return?

Filing tax returns is different for a nonprofit than a for-profit corporation. Not only are the reporting requirements very different, but nonprofits often have different fianncial concerns than for-profit entities. Nonprofits with low overheads may even consider saving the money that a tax professional would cost in favor of tax filing software.

14/12/2022 9:13 PM

What is involved in filing a nonprofit tax return?

Most nonprofits are required to submit an informational tax return, called Form 990, within 5 months and 15 days after the close of the fiscal year. For organizations with a fiscal year-end of December 31, the due date would be May 15.

There are different variations on Form 990 for different sizes or statuses of nonprofit organizations. The different categories of nonprofits are based on assets, annual receipts, or public charity status.

Form 990N

Small nonprofits with less than $50,000 in annual receipts can elect to file Form 990N, also known as the e-Postcard. It must be filed electronically. The e-Postcard is very quick and simple to fill out. The only information on it is:

  • Legal organization name
  • Other DBA names
  • Mailing address and website
  • Organization’s EIN (not the tax-exempt number)
  • Name and address of a principal officer in the organization. This is usually the president, secretary, or treasurer.
  • The dates of the organizations’ tax year
  • Verification that the organization is still active
  • Verification that the organization’s gross receipts are still less than $50,000 per year

Form 990-EZ

Nonprofits that are too large to use Form 990N who have less than $200,000 in gross receipts in a year or $500,000 in total assets can use Form 990-EZ. Certain religious, educational, governmental or political nonprofits do not have to file 990-EZ even if they meet the asset or gross receipt constraints for this form. Form 990-EZ also has to be e-filed for fiscal years after 2021.

Form 990-EZ requires much more financial detail than 990N, but is still straightforward – it is informational and does not require calculations. Tax filing software can make the process intuitive.

Form 990

Organizations larger than $500,000 in assets or $200,000 in annual receipts have to fill out a full Form 990. Smaller organizations that could elect to use 990N or 990EZ can also choose to use Form 990; if they do, they have to fill it out completely.

Form 990 is heavily based on the nonprofit organization’s financial statements for the year. It includes space for information from the balance sheet as well as revenue and expense reporting.

Form 990PF

Private charitable foundations must use Form 990PF regardless of size or asset level.

How hard is it to file my Form 990?

Form 990 is a straightforward process. Since it is informational, it is simply a matter of transferring information from the organization’s documents onto the official forms. The longer versions of Form 990 may be intimidating for people who aren’t as familiar with tax forms, but tax software can make the process intuitive.

Should I hire a CPA to do it?

Nonprofits have different financial priorities than for-profit companies. Organizations that receive donations must be good stewards of their receipts, whether the donations come specifically earmarked or not.

If your organization’s finances are in disarray, hiring a CPA may be the fiscally responsible thing to do. While it is an investment to hire a tax professional, it can allow you to file a complete and accurate tax return, and sort out your finances to start the next year fresh.

However, if you already have all the financial information you need for your Form 990 return, there is no reason you cannot file the return yourself and save your organization’s money for its key missions. Online tax filing software such as 990.tax makes the process safe, accurate, and intuitive. Contact us today to see how easy nonprofit tax filing can be.

References: https://www.irs.gov/charities-non-profits/form-990-resources-and-tools

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