form 990 instructions

Also, specify on Schedule J (Form 990), Part III, the name of the unrelated organization, the type and amount of compensation it paid or accrued, and the person receiving or accruing such compensation. See Compensation from unrelated organizations or individuals, earlier. For each person listed in column (A), check the box that reflects the person’s position with the organization during the tax year. Don’t check more than one box, unless the person was both an officer and a director/trustee of the organization during the tax year.

An organization described below doesn’t have to file Form 990 or 990-EZ even if it has at least $200,000 of gross receipts or $500,000 total assets at the end of the tax year (except for section 509(a)(3) supporting organizations described in General Instructions A). See General Instructions A, The Best Guide to Bookkeeping for Nonprofits earlier, for determining whether the organization can file Form 990-EZ instead of Form 990. An organization described in item 10 or 11 under Certain organizations with limited gross receipts, later, is required to submit Form 990-N unless it voluntarily files Form 990 or 990-EZ, as applicable.

Bonus Step: You can always file for an extension.

X must be listed as one of the organization’s five highest compensated employees. Management companies and similar entities that are independent contractors shouldn’t be reported as key employees. The organization’s top management official and top financial official are deemed officers rather than key employees. An officer is a person elected or appointed to manage the organization’s daily operations. An officer that served at any time during the organization’s tax year is deemed a current officer.

The officers of an organization are determined by reference to its organizing document, bylaws, or resolutions of its governing body, but at a minimum include those officers required by applicable state law. Every organization that files Form 990-EZ must complete columns (A) and (B) of Part II of the return and can’t submit a substitute balance sheet. Failure to complete Part II can result in penalties for filing an incomplete return. If there is no amount to report in column (A), Beginning of year, enter a zero (“-0-”) in that column. Enter the total amount paid or incurred for the use of office space or other facilities, including rent; mortgage interest; heat, light, power, and other utilities; outside janitorial services; real estate taxes and property insurance attributable to rental property; and similar expenses.

Required Filing (Form 990 Series)

If the organization prepares Form 990 for state reporting purposes, it can file an identical return with the IRS even though the return doesn’t agree with the books of account, unless the way one or more items are reported on the state return conflicts with the instructions for preparing Form 990 for filing with the IRS. For example, a tax-exempt entity that has adopted an accounting method for an item of income from an unrelated trade or business must generally request consent before it can change its method of accounting for that item in any subsequent year. This is true regardless of whether gross income from the unrelated trade or business is greater than or equal to $1,000 in such subsequent year. The 2022 Form 990 instructions also provide clarity in determining whether an individual compensated through a management company should be considered an employee of the taxpayer. Under section 4958, any disqualified person who benefits from an excess benefit transaction with an applicable tax-exempt organization is liable for a 25% tax on the excess benefit.

form 990 instructions

Where the disqualified person elects to include an amount in gross income in the tax year of transfer under section 83(b), the excess benefit transaction occurs on the date the disqualified person receives the economic benefit for federal income tax purposes. An excess benefit transaction occurs on the date the disqualified person receives the economic benefit from the organization for federal income tax purposes. However, when a single contractual arrangement provides for a series of compensation payments or other payments to a disqualified person during the disqualified person’s tax year, any excess benefit transaction for these payments occurs on the last day of the disqualified person’s tax year. See Public inspection and distribution of applications for tax exemption and annual information returns of tax-exempt organizations next.

What Is Form 990: Return of Organization Exempt From Income Tax?

These rules only apply to certain applicable section 501(c)(3), 501(c)(4), and 501(c)(29) organizations. An “applicable tax-exempt organization” is a section 501(c)(3), 501(c)(4), or 501(c)(29) organization that is tax exempt under section 501(a), or was such an organization at any time during a 5-year period ending on the day of the excess benefit transaction. Except as otherwise provided, a regional or district office of a tax-exempt organization must satisfy the same rules as the principal office about allowing public inspection and providing copies of its application for tax exemption and annual information returns. Do not include any penalties, fines, or judgments imposed on the organization as a result of legal proceedings; report and identify those expenses on line 16. Also, report on line 12 compensation to employees that provide fundraising, legal, accounting, or other professional services as part of their employment. Also, include in the total on line 12 the amount of federal, state, and local payroll taxes for the year that are imposed on the organization as an employer.

The term “tax-exempt organization” also includes any section 4947(a)(1) nonexempt charitable trust or nonexempt private foundation that is subject to the reporting requirements of section 6033. The IRS generally can’t disclose portions of an exemption application relating to trade secrets, etc. The IRS can, however, disclose the names and addresses of contributors of section 527 organizations filing Form 990 or 990-EZ and for organizations that file Form 990-PF. For other organizations that file Form 990 or 990-EZ, the names and addresses of contributors aren’t required to be made available for public inspection.