What IRS Form 990 Is For

IRS Form 990 (2024) is a key tax filing for tax-exempt organizations. It ensures transparency by detailing essential basic information about the organization’s finances, including income tax, payroll taxes, and excise taxes. This form helps the IRS and the public track how organizations handle tax payments and operate.

Accurately filing Form 990 on time is crucial for maintaining your organization’s tax-exempt status. Missing the April deadline or submitting the form incorrectly can lead to significant penalties, including the minimum penalty for late filings. Understanding the filing process and deadlines is essential to avoid unnecessary complications, such as interest charges or delayed refunds.

When You’d Use IRS Form 990

IRS Form 990 is required for tax-exempt organizations with annual gross receipts of $200,000 or more or total assets exceeding $500,000. It provides detailed financial information to the IRS, ensuring transparency about tax payments, income tax, and governance. Organizations meeting these thresholds must file Form 990 to report their tax year, expenses, and estimated tax payments.

Smaller organizations may file Form 990-EZ or 990-N, depending on their size. Form 990 is due by May 15 for calendar-year organizations. Missing this due date can result in late filing penalties and interest charges. Starting in 2024, the IRS requires all Form 990 filings to be e-filed, streamlining processing and reducing errors. Make sure to include the correct mailing address and payment method when filing.

Key Rules or Details 2024

IRS Form 990 has specific rules that must be followed to ensure compliance. Starting in 2024, the IRS requires e-file submission for all Form 990 filings. Paper forms will no longer be accepted, streamlining the process.

• Penalties for Late Filing: Organizations that file late will incur penalties, based on their annual gross receipts. These penalties can quickly add up.
  
  
• Penalties and Interest: If taxes are owed, interest will accrue on unpaid amounts until fully paid.
  
  
• Tax-Exempt Status Revocation: Missing Form 990 for three consecutive years will result in the automatic loss of your tax-exempt status.

Staying aware of these key rules will help organizations avoid penalties and ensure compliance. Filing on time is essential for maintaining your tax-exempt status.

Step-by-Step (High Level)

Filing IRS Form 990 becomes straightforward when broken down into clear steps.

Step 1: Gather Required Documents

Collect financial statements, governance documents, and tax returns required for reporting. Ensure that all data is accurate to avoid errors.

Step 2: Choose the Correct Form

Determine if your organization needs to file Form 990, Form 990-EZ, or Form 990-N based on the organization’s annual gross receipts.

Step 3: Complete the Form

Follow the step-by-step instructions from the IRS to fill out the form accurately. Double-check all entries for accuracy.

Step 4: Submit the Form Electronically

E-file the form via IRS-approved software, as paper forms are no longer accepted for 2024.

Common Mistakes and How to Avoid Them

Filing IRS Form 990 correctly is essential for compliance. Here are common mistakes and tips to avoid them:

1. Using the Wrong Form Version
   
   
   
   • How to Avoid: Always check the IRS website for the correct 2024 version before filing.
     
     
2. Omitting Schedule O
   
   
   
   • How to Avoid: Complete Schedule O, even if no additional information is reported.
     
     
3. Inconsistent Reporting
   
   
   
   • How to Avoid: Double-check all financial data to ensure income and expenses match supporting documents.
     
     
4. Not Filing an Amended Return
   
   
   
   • How to Avoid: If you discover errors, file an amended return promptly to correct them.
     
     
5. Missing the Filing Deadline
   
   
   
   • How to Avoid: Be aware of the due date (15th day of the 5th month after the fiscal year) and file on time or request an extension.

Avoiding these mistakes ensures accurate filings and helps minimize penalties.

What Happens After You File

After submitting IRS Form 990, the IRS begins processing the return. Electronic submissions are typically processed within a few weeks, but more complex returns may take longer to review. If no issues arise, the form is accepted and recorded in your account.

If discrepancies are found, the IRS may request additional information or clarification. In some cases, you could face interest charges and late payment penalties if taxes are owed. If your organization fails to file for three consecutive years, your tax-exempt status could be revoked.

Once your filing is processed, retain a copy for your records to ensure transparency and support compliance. File your return promptly to avoid penalties and maintain your organization’s standing with the IRS.

FAQs

Can I file IRS Form 990 late and still avoid penalties?

If you file IRS Form 990 late, you will face IRS penalties based on the tax owed. However, if there’s a reasonable cause for the delay, such as paying late due to unforeseen circumstances, you may qualify for penalty relief. To avoid penalties, file as soon as possible to minimize the fines.

What should I do if I owe taxes after filing Form 990?

If you owe taxes after filing, make your tax payments promptly to avoid interest charges. If you cannot pay in full, request an installment agreement or payment plan with the IRS to manage your balance. Timely payments prevent additional penalties and keep your organization in good standing.

What is the deadline for filing IRS Form 990?

Form 990 is typically due by April 15 for calendar-year organizations. If you cannot meet this deadline, you may apply for an extension to file later, but any tax payments are still due on the original date.

How do I amend an incorrect Form 990?

If you discover a mistake, file an amended return to correct it promptly. Ensure the employer identification number (EIN) and all other details are accurate to prevent penalties.

What happens if my organization misses three consecutive Form 990 filings?

Missing three consecutive filings will lead to the loss of your tax-exempt status. To restore it, you must file all missing returns and follow the IRS process for reinstatement. Maintaining timely filings ensures continued tax-exempt status and avoids penalties.