Filing the proper information return is one of the most crucial responsibilities for a tax-exempt organization. For many nonprofit organizations, the Internal Revenue Service created Form 990-EZ as a simplified filing method for organizations with smaller annual receipts and assets. This guide focuses on the 2018 version of the form, outlining who must file, what information is required, and how compliance helps maintain tax exemption under the Internal Revenue Code.

Nonprofit organizations use Form 990-EZ to disclose charitable contributions, report executive compensation, and share their organization's mission with the government and the public. These tax filings ensure transparency, enabling the community to evaluate how contributions are managed. For many groups, including churches, educational charities, and small corporations, the form strikes a balance between accessibility and accountability. The 2018 IRS instructions for this form establish the baseline for eligibility, filing requirements, and reporting standards.

Tax-exempt entities that remain compliant with Form 990-EZ obligations build trust with donors, grant makers, and public safety agencies that depend on nonprofit support. By carefully gathering records and preparing accurate tax returns, organizations strengthen their credibility while safeguarding their eligibility to maintain tax-exempt recognition. This guide explains each step of the process in detail, enabling nonprofit leaders to file confidently while remaining aligned with both the tax code and their organizational mission.

Understanding Tax-Exempt Organizations

Tax-exempt organizations play a central role in communities by providing charitable programs, religious services, educational opportunities, and public safety support. To operate tax-free, these organizations must meet the requirements of the Internal Revenue Service and submit annual tax filings. Understanding their definitions, eligibility standards, and compliance obligations helps nonprofit leaders manage responsibilities effectively.

Definition of a Tax-Exempt Organization

The Internal Revenue Code defines a tax-exempt organization as an entity that does not pay federal income tax on activities related to its mission. These groups serve a recognized public purpose such as advancing education, promoting religion, or delivering charitable aid. While exempt from income tax, they must still file annual reports and disclose financial information to maintain recognition as a tax-exempt entity.

Eligibility Standards

To qualify for exemption, nonprofit organizations must use their resources solely for charitable, educational, religious, or scientific purposes. Eligible groups include public charities, religious institutions, and community-based entities. They must document how grants, contributions, and donations are applied while ensuring that private benefit is prevented. Careful recordkeeping and adherence to federal standards remain essential for maintaining eligibility.

Categories Under the Internal Revenue Code

The Internal Revenue Code includes several types of exempt entities. Section 501(c)(3) applies to charities, schools, and scientific or educational research organizations, while other sections cover labor unions, civic leagues, and business associations. Regardless of classification, all exempt entities must disclose executive compensation, financial details, and program service accomplishments to demonstrate compliance with federal requirements.

Public Reporting Requirements

Exempt organizations must file annual forms, such as Form 990-EZ, to confirm their compliance and maintain their exemption. These filings enable the Internal Revenue Service to review compliance with the tax code while also providing the public with access to program information, details on charitable contributions, and leadership information. Guidance on these requirements is available in IRS Publication 557 – Tax-Exempt Status.

Maintaining Status Through Compliance

Organizations that consistently meet their obligations build stronger trust with donors, grant makers, and government partners. Transparent reporting, responsible leadership, and mission-driven activities protect eligibility while reinforcing credibility. By aligning operations with the Internal Revenue Code, nonprofit organizations preserve their tax exemption and continue serving their communities as trusted stewards of charitable resources.

Nonprofit Organizations and IRS Compliance

Nonprofit organizations strengthen communities by advancing education, supporting charitable causes, promoting religion, and contributing to public safety. To remain eligible for tax exemption, they must meet standards established under the Internal Revenue Code and submit accurate tax filings each year. Compliance ensures accountability, preserves public trust, and protects the ability to receive deductible charitable contributions.

Core Compliance Responsibilities

Nonprofit organizations must meet several obligations to maintain their tax-exempt status. Annual filings confirm financial details, disclose executive compensation, and describe the organization’s mission and achievements. These standards ensure that charitable contributions remain directed toward public benefit rather than private interests.

• Annual Reporting: Nonprofits are required to submit Form 990-EZ or another applicable return each tax year to document their revenue and activities.
  
  
• Public Disclosure: Returns are made available through systems such as Nonprofit Explorer, giving donors and researchers direct access to records.
  
  
• Financial Transparency: Tax filings must report contributions, grants, and program expenditures in a way that reflects the organization’s mission and community support.
  
  
• Executive Compensation: The compensation of officers, directors, and trustees must be disclosed to ensure accountability and prevent the misuse of charitable resources.
  
  
• Recordkeeping: Nonprofits must maintain detailed records of donations, grants, and program outcomes to demonstrate compliance with the tax code.

Why Compliance Matters

Fulfilling compliance obligations benefits both the organization and the public. Transparent reporting fosters donor confidence, strengthens eligibility for grants, and reinforces an organization’s role as a trustworthy steward of community resources. 

Leaders who prioritize accuracy and adherence to federal requirements protect their nonprofit’s exemption and ensure that the organization continues to fulfill its charitable mission. Through consistent reporting and lawful operation, nonprofits safeguard credibility and preserve their long-term impact.

Tax Exemption Rules and 2018 Filing Requirements

Tax-exempt organizations that wish to maintain their tax-exempt status must comply with the rules established by the Internal Revenue Code. These requirements ensure that charitable resources are applied correctly and that nonprofits maintain public trust. For the 2018 tax year, specific filing thresholds determined whether an organization qualified to use Form 990-EZ instead of the longer Form 990.

Eligibility to File Form 990-EZ

Organizations can file Form 990-EZ if they reported gross receipts of less than $200,000 and total assets of less than $500,000 at the end of the year. Entities exceeding either threshold were required to submit Form 990. Certain groups, such as private foundations and health insurance issuers under Section 501(c)(29), were excluded from filing the EZ version, regardless of their financial size. These thresholds allowed the Internal Revenue Service to standardize nonprofit reporting while reducing the filing burden for smaller entities.

Reporting Donor Information in 2018

For the 2018 tax year, donor reporting rules were updated under Revenue Procedure 2018-38 published by the IRS. Under this rule, most tax-exempt entities other than 501(c)(3) public charities and section 527 political organizations no longer need to report donor names and addresses on Schedule B. They still had to disclose contribution amounts, descriptions of noncash gifts, and other financial details. The adjustment reduced administrative work while maintaining transparency for organizations that are most dependent on charitable contributions.

Filing Deadlines and Extensions

Organizations were required to file by the 15th day of the fifth month after the close of their accounting period. For calendar year filers, this meant May 15, 2019, for tax year 2018. Extensions were available through Form 8868, which provided an automatic six-month extension for filing but did not extend the time to pay unrelated business income tax obligations. Timely filing ensured that nonprofits avoided late-filing consequences and maintained recognition as tax-exempt entities.

Preserving Exemption Through Compliance

Meeting the filing requirements protects both the organization and its beneficiaries. Correctly submitted forms confirm eligibility for exemption, demonstrate accountability to the public, and fulfill obligations under the Internal Revenue Code. By following the rules established for 2018, nonprofits reinforced their credibility and supported continued access to tax benefits that sustain community programs.

Charitable Contributions and Public Reporting

Charitable contributions remain a central part of nonprofit organizations’ financial health and a key measure of their accountability to the public. To preserve trust and maintain tax-exempt status, organizations must accurately record, disclose, and report contributions in their annual filings. Public reporting requirements ensure that donors, researchers, and government agencies have transparent access to financial details.

Key Reporting Standards for Contributions

• Contribution Disclosure: All contributions, including cash, property, and noncash items, must be reported clearly on Form 990-EZ.
  
  
• Donor Reporting Rules: For the 2018 tax year, only 501(c)(3) organizations and section 527 political groups had to list donor names and addresses; other exempt entities reported only contribution amounts.
  
  
• Noncash Contributions: Organizations must provide descriptions and fair market values of donated property or goods to maintain transparency and accountability.
  
  
• Threshold for Reporting: Contributions of $5,000 or more from a single donor trigger additional disclosure on Schedule B, depending on the organization’s type.
  
  
• Restricted vs. Unrestricted Gifts: Nonprofits must identify whether contributions are restricted for specific programs or unrestricted for general use.
  
  
• Public Accessibility: Reported contributions are subject to public inspection, allowing individuals to evaluate how resources are collected and managed.
  
  
• Impact on Tax Filings: Accurate contribution reporting supports eligibility for continued exemption and demonstrates proper stewardship of charitable resources.
  
  
• Transparency for Donors: Donors reviewing filings gain confidence in an organization’s ability to use funds responsibly for charitable purposes.

Purpose of Public Reporting

• Promotes Accountability: Public reporting helps demonstrate that contributions are used for approved charitable purposes.
  
  
• Supports Grant Applications: Funders often review a nonprofit's past filings to determine whether it qualifies for new grants.
  
  
• Prevents Misuse of Funds: Transparent contribution data ensures funds are not redirected for private gain.
  
  
• Strengthens Community Trust: Reporting contributions openly reassures the community that nonprofits remain aligned with their mission.
  
  
• Encourages Continued Giving: Donors are more likely to give when they can review reliable financial records.
  
  
• Reinforces Legal Compliance: Reporting standards protect nonprofits from compliance risks that could jeopardize their exemption.

Nonprofits that adhere to these standards safeguard their ability to remain tax-exempt, while also fostering the confidence of donors and government agencies. Transparent, accurate reporting of charitable contributions ensures both transparency and sustainability for the organization’s mission.

Key 2018 Changes to Donor Reporting

For the 2018 tax year, the Internal Revenue Service introduced significant revisions to the rules governing donor reporting for tax-exempt organizations. These changes focused on simplifying requirements while maintaining transparency for organizations that rely most heavily on charitable contributions. Nonprofits needed to adapt their filing practices to align with these adjustments, which directly influenced how contributions were recorded and disclosed.

Labeled Changes and Their Impact

• Revenue Procedure 2018-38: The IRS issued Revenue Procedure 2018-38, which modified donor information reporting on Schedule B of Form 990-EZ. Most tax-exempt organizations, other than 501(c)(3) public charities and section 527 political groups, no longer had to report donor names and addresses. This reduced administrative work for many nonprofits while keeping the focus on contribution amounts and noncash disclosures.
  
  
• Organizations Still Required to Report: Public charities under section 501(c)(3), nonexempt charitable trusts under section 4947(a)(1), and political organizations under section 527 continued to disclose donor names and addresses. These groups remained subject to stricter reporting standards to ensure accountability in the use of charitable contributions and political funds.
  
  
• Information Still Required Across Entities: Even with relaxed reporting rules, all organizations were still required to disclose total contribution amounts, descriptions of non-cash gifts, and related financial details. This ensured that the government could evaluate compliance with the Internal Revenue Code.
  
  
• Public Access to Contribution Data: The rule did not change public inspection requirements. The portions of Schedule B that organizations were required to file still became publicly accessible, reinforcing accountability to donors and the community.
  
  
• Effect on Compliance Practices: Nonprofits modified their record-keeping systems to distinguish between donor data required for disclosure and information that could remain confidential. This protected sensitive donor information while ensuring the organization's compliance with relevant regulations.

Broader Significance of the 2018 Rule

The 2018 changes balanced reduced administrative demands with continued transparency for organizations most dependent on charitable contributions. Nonprofits that applied the new rules correctly preserved their eligibility for exemption while strengthening donor confidence. By following these requirements, organizations demonstrated responsible reporting and alignment with the Internal Revenue Code.

Completing Form 990-EZ Step by Step

Filing Form 990-EZ requires careful preparation, accurate data entry, and an understanding of the sections included in the return. Nonprofit organizations that qualify for this form must provide detailed financial information, describe their mission, and disclose information about their leadership and compensation. Each step of the process ensures compliance with the Internal Revenue Code while maintaining the organization’s tax-exempt status.

Step 1: Gather Organizational Information

Nonprofits begin by preparing basic records such as the organization’s legal name, address, Employer Identification Number, and accounting period. The form also requires information about the type of return being filed, whether it is an initial, final, or amended submission. Maintaining these records in advance prevents delays and ensures accurate completion of the form.

Step 2: Complete Part I – Revenue, Expenses, and Net Assets

Part I summarizes the organization’s financial activity during the tax year. Nonprofits are required to report contributions, program service revenue, investment income, and other receipts. Expenses, including program costs, management expenses, and fundraising activities, must also be listed separately. The final portion of this part calculates changes in net assets, which reflect the organization’s financial position.

Step 3: Complete Part II – Balance Sheets

In this section, organizations disclose beginning and ending balances for assets, liabilities, and net assets. Entries include cash, investments, property, equipment, and any debts. Accurate reporting of both opening and closing figures ensures the Internal Revenue Service can evaluate changes in financial condition during the year.

Step 4: Complete Part III – Program Service Accomplishments

This section requires nonprofits to describe their organization’s mission and the major programs carried out during the year. Descriptions should be specific, measurable when possible, and connected directly to the organization’s exempt purpose. Program expenses related to these activities must also be recorded to demonstrate that resources are used appropriately.

Step 5: Complete Part IV – Officers, Directors, Trustees, and Key Employees

Part IV requires detailed reporting of individuals who govern or manage the organization. Nonprofits must include names, titles, average weekly hours worked, and compensation details. Both direct compensation and benefits must be disclosed to ensure transparency in executive compensation practices.

Step 6: Complete Part V – Other Information

This section includes questions covering political activity, conflict of interest policies, recordkeeping procedures, and governance standards. Each question must be answered clearly, and additional explanations should be provided if required. Responses in this part help confirm the organization’s alignment with tax-exempt requirements.

Step 7: Complete Part VI – Section 501(c)(3) Organizations Only

Organizations recognized as 501(c)(3) must complete Part VI, which addresses public charity status, private foundation rules, and unrelated business income. This section requires accuracy, as it directly affects continued qualification for exemption. If applicable, nonprofits must also complete Schedule A to demonstrate their public support levels.

Step 8: Assemble Required Schedules and Attachments

Depending on activities and contributions, nonprofits may need to include additional schedules such as Schedule B for donor reporting, Schedule C for lobbying, or Schedule G for fundraising. Each schedule must be attached in the proper order to ensure the filing is complete. Missing attachments may cause delays or affect compliance status.

Step 9: Sign and Submit the Return

The final step requires a signature by an authorized officer, typically the president, treasurer, or another executive leader. If a preparer assists with the filing, both parties must sign the document. Organizations may then submit the return electronically or by mail, depending on eligibility and preference.

Final Thoughts on Step-by-Step Filing

Completing Form 990-EZ requires precision and thoroughness at each stage. By following the structured process, nonprofit organizations demonstrate compliance with federal requirements while reinforcing accountability to donors and the public. Careful reporting of financial details, mission-driven activities, and leadership compensation supports both transparency and continued recognition as a tax-exempt entity. 

Filing Methods and Common Mistakes

Nonprofit organizations filing Form 990-EZ for 2018 had the option to choose between electronic submission and paper filing. Each method had distinct requirements, and selecting the right option ensured the return was processed efficiently while preserving the organization’s tax exemption. Attention to accuracy and recordkeeping reduced the risk of errors that might affect compliance.

Filing Methods

Electronic filing provides benefits such as faster acknowledgment, built-in error detection, and secure transmission of tax filings. Large organizations that filed 250 or more returns across different forms during the year were required to use this method. Paper filing remained an option for smaller entities, though returns sent by private delivery services had to meet specific IRS mailing guidelines to qualify as timely.

Common Mistakes to Avoid

• Missing Signatures: A return without the proper signature from an authorized officer or preparer is incomplete.
  
  
• Incorrect Financial Reporting: Nonprofits often misreport contributions, grants, or expenses by netting them instead of recording gross amounts.
  
  
• Omitted Schedules: Required schedules such as Schedule A or Schedule B must be attached when applicable.
  
  
• Incomplete Information: Blank responses on financial details, governance questions, or officer listings lead to filing errors.
  
  
• Late Submission: Failing to meet the filing deadline may result in compliance consequences and jeopardize the organization’s standing.
  
  
• Disclosure of Prohibited Data: Sensitive personal identifiers such as Social Security numbers should never appear on the return.

Closing Perspective

Accurate filing methods and awareness of common mistakes allow nonprofits to safeguard their tax exemption while maintaining public trust. By selecting the correct submission process and reviewing for errors, organizations strengthen transparency and accountability. Careful attention to these details preserves credibility with donors, government agencies, and the broader community.

Nonprofit Explorer and Public Charity Classification

Nonprofit Explorer has become one of the most relied upon systems for accessing nonprofit filings and financial records. It provides public access to information submitted on annual returns, such as Form 990-EZ, allowing donors, corporations, and researchers to evaluate an organization's performance. At the same time, the public charity classification determines how a nonprofit is legally recognized under the Internal Revenue Code, shaping how it reports charitable contributions and secures its tax-exempt status.

Comparing Nonprofit Explorer and Public Charity Status

Nonprofit Explorer

• Purpose: Provides transparency by giving the public access to nonprofit financial details.
• Data Available: Annual tax filings, executive compensation, revenue, expenses, and program details.
• User Audience: Donors, corporations, community members, and researchers.
• Impact on Transparency: Strengthens donor trust by making records public and easily accessible.
• Examples of Use: Donors reviewing an organization before making contributions or grants.
• Compliance Connection: Enhances accountability by displaying IRS filings online through public platforms.

Public Charity Classification

• Purpose: Establishes legal recognition of an organization as a 501(c)(3) public charity.
• Data Available: Standards for eligibility, mission requirements, and reporting rules tied to charitable support.
• User Audience: Government agencies, nonprofit leaders, and tax professionals.
• Impact on Transparency: Ensures compliance with Internal Revenue Code standards and charitable contribution rules.
• Examples of Use: Nonprofits verifying they qualify for exemption and meet IRS reporting obligations.
• Compliance Connection: Determines which organizations can receive tax-deductible contributions and remain tax-exempt.

Significance for Nonprofit Organizations

Nonprofit Explorer and public charity classification work together to enhance oversight and community confidence. By making tax filings available, Nonprofit Explorer enables donors and researchers to assess how organizations manage their contributions and resources. Public charity classification, meanwhile, provides the legal framework that governs eligibility for exemption, setting rules for financial transparency and executive compensation reporting.

Together, these systems help nonprofit organizations demonstrate accountability while reinforcing their mission to serve the community. Leaders who understand both tools can strengthen donor confidence, qualify for grants, and maintain their tax-exempt status. By combining transparent access with a clear legal framework, nonprofits ensure that their operations align with federal expectations and maintain the trust of their communities.  

Frequently Asked Questions    

What organizations qualify to file Form 990-EZ?

Nonprofit organizations may file Form 990-EZ if their annual gross receipts are under $200,000 and total assets are below $500,000. This filing option is designed for smaller tax-exempt organizations that still need to provide financial details, disclose charitable contributions, and confirm compliance with the Internal Revenue Code. Larger nonprofit organizations exceeding these thresholds must use Form 990, which requires expanded reporting on programs, executive compensation, and mission-driven activities.

How does Form 990-EZ support a tax exemption?

Filing Form 990-EZ provides the Internal Revenue Service with clear documentation of charitable support, community activities, and financial details. Accurate filings enable tax-exempt entities to maintain their good standing, remain eligible for deductible contributions, and enhance their credibility with donors. By submitting this form annually, nonprofit organizations demonstrate compliance with tax code requirements while reinforcing their commitment to public accountability and alignment with their charitable missions.

What information must nonprofits disclose on Form 990-EZ?

Nonprofit organizations must disclose revenue, expenses, program service accomplishments, and governance details on Form 990-EZ. They are required to report charitable contributions, grants, and community support while also recording executive compensation and officer responsibilities. These financial details help confirm that resources are dedicated to tax-exempt purposes rather than personal gain. Public disclosure of this information ensures continued trust in the organization’s mission and accountability to both donors and government agencies.

Why is public charity classification important?

Public charity classification determines how nonprofit organizations are treated under the Internal Revenue Code. Organizations recognized as public charities can receive tax-deductible contributions, qualify for grants, and access additional community support. This classification also governs reporting rules, requiring transparency about charitable donations and financial details. By maintaining their public charity status, nonprofit organizations safeguard their tax exemption and strengthen confidence among donors, corporations, and researchers who rely on verified records from the Nonprofit Explorer.

How are charitable contributions reported?

Charitable contributions must be reported in specific sections of Form 990-EZ, depending on their type and size. Significant contributions over $5,000 may trigger additional reporting requirements, while smaller donations are combined into total amounts. Noncash contributions, such as property or equipment, must be valued and listed separately. Proper reporting ensures transparency, maintains compliance with the Internal Revenue Code, and demonstrates that nonprofit organizations effectively utilize community support to fulfill their charitable missions.

What happens if a nonprofit fails to file?

If a nonprofit organization fails to submit Form 990-EZ for three consecutive years, its tax-exempt status is automatically revoked by the IRS. Once withdrawn, the organization must reapply with the Internal Revenue Service, which involves additional time, fees, and administrative review. This loss can limit access to grants, charitable contributions, and community support. Consistent filing enables nonprofit organizations to protect their exemption, remain eligible for tax-deductible donations, and maintain trust with the public.

How do executive compensation disclosures affect nonprofits?

Form 990-EZ requires nonprofit organizations to disclose executive compensation, officer responsibilities, and average weekly hours worked. This reporting fosters transparency by revealing how tax-exempt entities allocate resources and whether compensation aligns with the organization’s mission. Publicly available filings provide donors, corporations, and researchers insight into how nonprofit organizations operate. Transparent reporting on compensation helps mai