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As a nonprofit professional, you understand that every dollar counts when pursuing your mission. Fortunately, you can retain more revenue by leveraging one of the most significant advantages of 501(c)(3) status: tax deductions. 

 

While it’s likely that you’re already aware of 501(c)(3) tax exemptions, it’s another matter entirely to understand the complex process of filing your tax forms and maintaining compliance with IRS regulations. Learn more about the important nonprofit tax forms your organization should be aware of and how you can leverage them to save as much money as possible for your cause.

Which organizations are tax-exempt?

The first step in determining which forms you’re eligible to complete is to confirm that your nonprofit qualifies as a 501(c) organization. The most common 501(c) organization is 501(c)(3). According to the IRS, an organization is eligible for 501(c)(3) status if it meets the following criteria: 

 

• It’s organized and operated exclusively for tax-exempt purposes
• It doesn’t impact legislation or political campaigns
• None of its earnings benefit any private shareholders or interests

 

You can view a full list of exempt organization types here, but we’ll be focusing on 501(c)(3) nonprofits in this guide.

Which forms do 501(c)(3) organizations need to fill out?

The most important form that all 501(c)(3) nonprofit professionals should know about is Form 990 and its variants, which include:

 

• Form 990, which nonprofits with gross receipts over $200,000 fill out
• Form 990-N, which nonprofits with gross receipts under $50,000 fill out
• Form 990-EZ, which nonprofits with gross receipts between $50,000 and $200,000 fill out
• Form 990-PF, which all private foundations fill out no matter the financial status

 

Form 990 is the most comprehensive option that nonprofits can fill out. While it’s only required for the largest nonprofits, nonprofits of any size can choose to submit it if they prefer depending on which information they’d like to make public to potential donors and volunteers. 

 

Besides the Form 990 variants, your nonprofit might also need to complete 990 schedules. These are supplementary forms that cover specific aspects of nonprofits, such as their investments, political involvement, major donors, fundraising expenses, and loans. View the full list here to learn which schedules your nonprofit applies for and how to submit them.

Why are Form 990 and its variants important?

There are numerous reasons why filling out nonprofit tax forms is crucial for nonprofits. By filling out Form 990 or its variants, you’ll:

 

• Receive tax-exempt status
• Comply with the IRS
• Make important information publicly available for supporters
• Practice good nonprofit data hygiene 
• Prevent any fraud or misuse of funds
• Be able to apply for grant and funding opportunities
• Have standard financial data for goal-setting and annual reporting

 

Furthermore, if you fail to file your Form 990 on time, File 990 states that your organization could be subject to fines and have to take on the cumbersome process of reinstating your tax-exempt status. Thus, it’s crucial that your nonprofit knows your filing deadlines and submits your documents far in advance.

What type of information is required for Form 990?

For the full Form 990, you’ll need to provide your nonprofit’s:

 

• Address, name, contact details, and EIN
• Mission statement and program description
• Key officer information, including compensation
• Financial records
• Fundraising activities
• Confirmation of compliance with federal, state, and local nonprofit laws
• Disclosure of any conflicts of interest

 

The amount of information required for Form 990 means your nonprofit needs to stay vigilant and keep your data organized throughout the year. Ensure your nonprofit frequently appends its data and deletes duplicate records so your filing process goes as smoothly as possible.

How do I file Form 990 and its variants?

The Taxpayer First Act of 2019 changed the way nonprofits interact with and submit Form 990. It mandated that tax-exempt organizations filing more than 10 returns per year must file Form 990 electronically. Besides complying with IRS regulations, some benefits of filing Form 990 electronically include:

 

• Speeding up the filing process
• Creating a more accessible filing process
• Helping the environment by reducing paper usage
• Mitigating human error
• Minimizing accounting costs

 

Your nonprofit can leverage these advantages by using a certified Form 990 e-filing solution. The right solution will make the complicated filing process straightforward, even for new nonprofit founders. Plus, you can instantly receive a copy of your Form 990 for your records so you can maintain transparency with your staff, board members, and supporters. 

Wrapping Up

The last thing your nonprofit should be worrying about is your 501(c)(3) status. By understanding how nonprofit tax forms work and leveraging a user-friendly e-filing solution, you can reap the benefits of 501(c)(3) status and focus on what matters most: pursuing your purpose.