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Form 990 is more than just paperwork for nonprofits. It's a crucial annual filing requirement that maintains their tax-exempt status.
The Internal Revenue Service (IRS) requires Form 990, a financial report card demonstrating legitimacy and transparency to the government and the public. You might wonder about the importance of Form 990 in running or starting a nonprofit, the different types, and the step-by-step process for filing correctly.
We’re here to deliver detailed requirements, methods, and best practices for filing Form 990 and its importance for maintaining tax-exempt status for nonprofits.
Form 990, officially titled "Return of Organization Exempt from Income Tax," is an annual informational document for an organization’s tax-exempt status with the IRS.
The document typically includes details about your nonprofit's mission, programs, and finances. You can also highlight your organization's achievements from the past year.
While not technically nonprofit tax returns, Form 990 is the IRS's tool for ensuring your nonprofit complies with tax-exempt regulations.
It’s normal to need some help interpreting Form 990, and we’ve got you covered with a quick walkthrough:
Part I – Summary: This is a quick overview of your nonprofit, including your mission, programs, and financial highlights.
Part II – Statement of Program Service Accomplishments: Here, you’ll see details about your nonprofit’s programs and how effectively they meet your mission. You can also check how funds are being used toward specific programs.
Part III – Financial Statements: This section lists your nonprofit’s revenue and expenses and whether or not expenses align with your mission.
Part IV—Governance: This section includes information about your nonprofit board of directors, key staff, and their compensation.
Schedule A (for larger nonprofits): This is an important section for big nonprofits that outlines their public charity status and provides insight into revenue sources.
Why is Form 990 important?
Compliance with IRS and state laws
Nonprofits organizations must submit Form 990 as part of tax forms required by the IRS. Most states rely on this form of nonprofit compliance to conduct charitable and other regulatory oversight.
It also helps them assess whether organizations claiming exemption from state income tax follow their specified state-exempt requirements.
Form 990 is a publicly accessible document that discloses information about your finances, activities, and governance to potential supporters. This nonprofit transparency helps you gain their trust and convince them to support your organization.
Grant funding and sponsorships
Many grant-making organizations and corporate sponsorship opportunities require you to include a copy of Form 990. Having missing, late, or incomplete records will place you at a disadvantage.
Influence donor decisions
There is a good chance that donors, especially major gift givers, will review your Form 990 before making any decision for insights into which of your programs are most effective.
Internal oversight
Preparing Form 990 requires thoroughly evaluating your organization's financial activities and governance practices. It will help your leadership identify areas of improvement and practices that deliver results.
Form 990 penalties are costly
The maximum penalty for late returns is the lesser of $10,500 or 5% of the organization's gross receipts for the year. If your organization doesn’t file the return by the specified date, individuals responsible for the delay may face a penalty of $10 per day, with a maximum of $5,000 for all individuals.
Form 990-N (e-Postcard) is for organizations with gross receipts of $50,000 or less. This short online form requires basic information like your nonprofit's name, address, EIN, tax year, principal officer details, website URL, and confirmation of receipts under $50,000.
While it's the simplest version, eligible organizations can opt to file a complete return for more comprehensive reporting.
Filing requirements:
Must be submitted electronically via the IRS website or an approved provider.
This only includes basic info like the organization name, EIN, address, website (if any), and a statement confirming gross receipts are under the threshold.
Nonprofit need-to-knows:
Great option for early-stage or small-budget nonprofits like local food pantries, community gardens, or small animal rescues.
Quick to file, but failing to file for three consecutive years results in automatic loss of tax-exempt status.
2. Form 990-EZ
Form 990-EZ is for organizations with gross receipts under $200,000 and total assets below $500,000. This four-page form is a condensed version of Form 990, requiring more detailed information than Form 990-N.
It includes balance sheet data, program accomplishments, and itemized grant information. If eligible organizations prefer, they can also file the standard Form 990.
Filing requirements:
Shorter than the full Form 990, but still requires:
Revenue and expense reporting
List of board members
Program accomplishments
Basic governance disclosures
Nonprofit need-to-knows:
Great for local museums, regional arts organizations, youth sports clubs.
Allows for transparency while still being a manageable lift for orgs without large admin teams.
Still public-facing, so it requires accuracy and accountability, especially as donors and the public may view this form.
3. Full-Form 990
Form 990 is the standard version for larger nonprofits with gross receipts of $200,000 or more or total assets of $500,000. This comprehensive 12-page form requires detailed organizational information, including your mission, financial records, and annual accomplishments.
Filing requirements:
Comprehensive documentation of:
Revenue, expenses, and balance sheets (annual gross receipts)
Mission and significant activities
Compensation of key personnel Governance practices and policies
Schedule attachments (A-O, R) depending on specific operations (e.g., lobbying, foreign grants, investments, etc.)
Nonprofit need-to-knows:
Great for larger public charities, hospitals, universities, national foundations, and faith-based networks.
Serves as a public-facing accountability document, often used by grantmakers, watchdog groups (like Charity Navigator), and donors.
Misreporting or vague details can damage credibility or raise red flags during audits.
4. Form 990-PF
Form 990-PF is specifically for private foundations, regardless of their financial status. This 13-page form requires detailed reporting on the foundation's private assets, trustees, officers, grants awarded, and other economic activities.
Filing requirements:
Detailed financial data
Grant disbursements
Lists of contributions
Trustees' and officers' information
Excise tax calculations on investment income
Payout requirement compliance
Nonprofit need-to-knows:
Great for family foundations, corporate foundations, and private grant-making entities.
Required disclosures show how money is distributed and whether the foundation meets minimum payout requirements (5% annually)
Highly scrutinized by the IRS for self-dealing, lobbying, and excess business holdings.
5. Form 990-T
Form 990-T is for nonprofits that have income of over $1000 from activities unrelated to their primary mission. Form 990-T doesn't replace your regular Form 990. You still need to file whichever version of Form 990 fits your organization's size and type in addition to Form 990-T for reporting extra income.
For example, if a charity runs a gift shop, the income from that shop might be considered unrelated business income and require Form 990-T.
Filing requirements:
Filed in addition to the regular Form 990/990-EZ/990-PF.
Reports income and expenses from business activities unrelated to the organization’s exempt purpose.
Must be filed electronically.
Nonprofit need-to-knows:
Public charities & universities may owe tax on bookstore sales, facility rentals, or advertising income. Private foundations often have Universal Basic Income (UBI) from investments or property.
Social clubs must report income from non-member use of facilities.
Filing is essential to remain compliant; too much UBI can trigger IRS scrutiny or impact tax-exempt status.
Does my nonprofit need to file a 990?
Most likely, yes. The IRS wants to ensure nonprofits stay transparent, use their funds responsibly, and continue to operate in line with their mission.
Do all nonprofits have to file a 990?
Most tax-exempt nonprofits need to file a version of the 990 each year, which may differ based on the types of forms we covered above. Which one you file depends on your organization’s size and structure.
Even if your nonprofit didn’t do much this year, skipping a 990 can cost you. Miss three years in a row? The IRS can automatically revoke your tax-exempt status.
There are a few exceptions for:
Some religious organizations (like churches and some church-affiliated entities)
Certain government organizations
Small affiliates under a group exemption might not have to file
If you’re not sure where your nonprofit falls, it’s a good idea to double-check with a tax professional or review the IRS guidelines.
How to file Form 990 to maintain tax-exempt status: Step-by-step
According to the Taxpayer First Act of 2019, a tax-exempt organization must submit Form 990 electronically. While this process can seem daunting, especially for first-timers, we've broken it down into manageable steps.
How do I file my 990 electronically?
1. Choose an authorized e-file provider
To file Form 990 electronically, you'll need to choose an IRS-authorized e-file provider—services or software platforms approved by the IRS for securely submitting your form online.
When choosing a provider, ensure they support all the forms and schedules your nonprofit needs. The IRS hosts a list of authorized e-file providers that offer software and services that allow you to file Form 990 electronically.
2. Register with the selected e-file provider
Create your account with the chosen e-file provider. You must enter information about your organization, such as your Employer Identification Number (EIN), contact information, fiscal year, and other relevant details.
3. Gather necessary information
Based on the form you must submit, ensure you have all the relevant information you need beforehand. Gather details, including:
Basic information (name, address, EIN)
Financial information (income, expenses, assets, liabilities)
Information about your programs and accomplishments
Governance, management, and policies
Compensation paid to officers, directors, trustees, key employees, etc.
4. Complete the application using the e-File provider’s software
Carefully follow the instructions provided by the e-file solution to start and file Form 990. The software will actively guide you through the process, prompting you to enter the necessary information per the field.
Most software programs automatically check for errors and omissions and typically include validation checks to ensure all essential fields are completed. However, you should double-check the information manually to play it safe.
Who is responsible for completing and submitting Form 990?
So now that you know your nonprofit probably needs to file a 990, who is responsible for doing it? Typically, the responsibility falls on your organization’s leadership, someone on the board, or your Executive Director.
Even if you hire an accountant or nonprofit tax pro to help prepare the form, it’s still up to your team to ensure everything gets submitted on time. Keeping good records throughout the year (like with a donor management system) makes the whole process much smoother.
Once your form is ready to go, it needs a signature to be valid. Official signatures are required from the following parties:
A current officer of the organization (usually your President, Executive Director, or Treasurer)
A tax preparer (if involved in the filing)
By signing, you’re certifying that everything is true, accurate, and complete to the best of your knowledge, so double-check that final copy before it goes out!
How do I know if my 990 has been filed?
If you work with a bookkeeper, CPA, or someone on your board who handles your filings, check in with them to confirm the filing and even provide a copy or receipt.
You can also look for confirmation emails from when the form was submitted (the IRS typically sends a notice confirming that they received and accepted it).
Bonus tip: Websites like GuideStar list recent 990s for public view, so even if you don’t have the paperwork on hand, those platforms can help you see what’s been filed.
If you do all that and still don’t see a recent 990, you can plan to talk to a professional about the following steps to be sure you’re on track.
Common 990 compliance mistakes and pitfalls to avoid
1. Missing the filing deadline
We’re all busy, and the 990 deadline can easily sneak up with everything else on your plate. Missing it can lead to penalties or even risk your tax-exempt status if it happens three years in a row. How easy would it be to feel the momentum of a big spring fundraiser in May and assume someone surely handled the 990 just to find out in July that no one did.
How to avoid it:
Add your filing due date (typically the 15th day of the 5th month after your fiscal year ends) to your org’s calendar.
Assign one person to own the task and send reminders well in advance.
Stay aware of Form 886, which may give an automatic six-month extension if needed.
2. Reporting inconsistent or incomplete financials
The numbers in your 990 need to match your internal records precisely to avoid raising red flags with the IRS or your funders. Incomplete or inconsistent info is one of the biggest reasons for delays or inquiries and can also impact your reputation.
For example, if your 990 says you spent $20,000 on programming one year, and the following year, it jumps to $70,000 with no context or explanation, a grant reviewer might wonder what happened—or whether your records are solid.
How to avoid it:
Reconcile your books before preparing your 990.
Double-check that your income and expense categories align with how they’re reported on the form.
If big changes happen, add clear explanations in the “Schedule O” section.
3. Forgetting to update key info
Form 990 includes a section where you’ll list current board members, officers, and key staff. Things change, and leaving this blank or listing outdated leadership can affect your credibility with funders or partners.
How to avoid it:
Review and update leadership info before starting the 990 and note any upcoming shifts that may impact things.
Make sure titles, roles, and compensation (if applicable) are accurate.
Use this opportunity to keep your organization’s records fresh on other public platforms so you’re leading with transparency.
Final thoughts on Form 990 for tax-exempt organizations
Filing Form 990 is a crucial responsibility for tax-exempt organizations, serving multiple purposes beyond maintaining your status. It builds trust, reinforces credibility, and demonstrates transparency in your operations. This accountability can ultimately attract donors and encourage contributions, strengthening your nonprofit's financial health.
While Form 990 is essential, it's just one part of managing your nonprofit's finances. Zeffy's free donation platform can help streamline your financial processes. With Zeffy, you can securely collect donations through various methods without fees, set taxation amounts, automatically generate tax receipts, and manage all donor information in one place.
The deadline for your 990 Form depends on your organization's fiscal year. Nonprofits must submit the form on the fifteenth day of the fifth month after their organization's accounting period ends. For instance, if your fiscal year ends on December 31, the form is due by May 15.
While the IRS doesn’t “audit” every Form 990 submitted, they do review them carefully. The 990 is used to help the IRS track whether nonprofits are following tax laws and staying compliant with their tax-exempt status. The IRS may flag certain issues, such as:
Inconsistent reporting: Big changes in revenue or expenses with no explanation.
Suspicious patterns: Like unusually high salaries for executives or disproportionate spending.
Failure to file: Missing multiple years can trigger an audit or a loss of your tax-exempt status.
However, just submitting a 990 doesn’t automatically mean you’ll be audited. It’s more about keeping everything honest and accurate so that if there is a question, you’re prepared to answer it.
The cost of filing your nonprofit's 990 can vary quite a bit based on how complex your organization is and whether you do it yourself or hire a pro:
If you’re filing the 990-N (for smaller organizations), it’s totally free. This is the e-postcard you file with the IRS if your organization earns under $50K a year.
The 990-EZ or full Form 990, costs range from $500 to $3,000 or more if hiring an accountant or nonprofit tax preparer. It depends on the size of your nonprofit and how much time is required to get your books in order.
If you’re using tax software or filing on your own, it might cost between $50-$200, but you’ll need to make sure you’re comfortable with all the financial details.
Yes, Form 990 is a public document, which means your nonprofit is required to make it available to the public. This is part of the IRS’s transparency rules for tax-exempt organizations.
It’s a good thing, though! It helps build trust with donors, funders, and the community. Being open about how funds are spent and how much is allocated toward different programs shows that your nonprofit is operating ethically and efficiently.
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Keep reading :
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