IRS Form 990-EZ Tax Year 2018 Compliance Checklist
Year-Specific Context and Changes
The 2018 Form 990-EZ filing year introduced new excise tax reporting obligations under Internal Revenue Code Section 4960 for organizations paying any of their five highest-compensated covered employees remuneration exceeding one million dollars, requiring organizations to determine exposure to this 21 percent excise tax and report accordingly on Part V, line 15.
This new compliance trigger fundamentally altered the governance and compensation reporting landscape for mid-sized exempt organizations filing the short form.
Additionally, changes to Schedule B donor disclosure requirements for non-501 (c) (3) organizations and updated FASB guidance on net asset classification through Accounting Standards Update 2016-14 reshaped financial presentation requirements for filers in 2018.
Section 4960 excise tax implications represent the primary year-specific compliance item for 2018 Form 990-EZ filers. Organizations must evaluate whether they paid or will pay covered employees more than $1 million in aggregate remuneration and excess parachute payments, triggering a mandatory Form 4720 filing and Schedule N completion if exposure exists.
Changes to unrelated business taxable income calculation methods also affect 2018 filers, as disallowed fringe benefit deductions now increase UBTI under IRC Section 512(a)(7), requiring organizations with employee fringe benefit programs to reassess their Form 990-T reporting positions.
Ten-Step Form 990-EZ 2018 Filing Compliance Checklist
Step 1: Determine Filing Requirement and Form Selection
Verify that your organization’s gross receipts are less than two hundred thousand dollars and total assets at the end of the tax year are less than five hundred thousand dollars (reported on Form 990-EZ Part II, line 25, column B). If either threshold is met or exceeded, you must file Form 990 (complete form) rather than Form 990-EZ. Confirm that your organization is described in section 501(c)(3), another section 501(c) subsection, or section 4947(a)(1), as these are the only entities permitted to file Form 990-EZ, excluding private foundations.
Organizations that maintain donor-advised funds, operate hospital facilities, or are sponsoring organizations of donor-advised funds must file Form 990 regardless of gross receipts or assets.
Step 2: Gather Required Financial and Operational Documentation
Collect complete accounting records, including Form W-2s for all employees, Form 1099-MISC statements for independent contractors, bank statements, investment account statements, property valuations, and loan documentation covering the entire 2018 tax year.
Assemble detailed program service descriptions documenting activities conducted during 2018, including the number of beneficiaries served, volunteer hours, and donated materials or services with quantifiable value. Compile records of all grants and contributions received, including contribution source documentation and valuation for non-cash contributions exceeding twenty-five thousand dollars in aggregate.
Step 3: Complete Part I (Revenue, Expenses, and Net Assets) with Year-End Balance Verification
Enter total revenue (line 9) by adding lines 1 through 8 (contributions, program service revenue, membership dues, investment income, gain or loss from asset sales, gaming and fundraising revenue, inventory sales, and other revenue), ensuring this total matches Part VIII column (A) line 12. Record total expenses (line 17) by adding lines 10 through 16 and verifying that this total matches Part IX column A (line 25).
Calculate excess or deficit for the year (line 18) by subtracting line 17 from line 9. Verify that the net assets at the end of the year (line 21) match the beginning net assets (line 19) plus excess or deficit (line 18) plus other changes in net assets (line 20).
Step 4: Complete Part II (Balance Sheet) and Reconcile with Part I Line Totals
Enter cash, savings, investments, land, buildings, other assets, total assets (line 25), total liabilities (line 26), and net assets or fund balances (line 27) for both the beginning of the year (column A) and the end of the year (column B). Ensure that line 27 column B (net assets at end of year), reconciles exactly with line 21 from Part I. The total assets (line 25, column B) determine whether Form 990-EZ may be filed; if total assets equal or exceed $500,000, Form 990 must be filed instead.
Step 5: Complete Part III (Program Service Accomplishments) with Expense Allocation
Describe each program service, providing an organization’s three most expensive programs by expense amount. For each program, enter the expense amount on line 28a, 29a, or 30a, and if grants were awarded as part of the program service, enter that grant amount in parentheses below the expense amount (note that grants are included within, not in addition to, the total expense). Use Schedule O if the detailed description space on Part III is insufficient, noting this by checking the Schedule O box and entering “See Schedule O”. Total all program expenses (lines 28a through 31a) on line 32.
Step 6: Identify Section 4960 Excise Tax Exposure and Report on Part V Line 15
Determine whether the organization paid or will pay any of its five highest-compensated covered employees (as reported in Part IV officers, directors, trustees, and key employees tables) more than one million dollars in aggregate reportable compensation and excess parachute payments during the 2018 tax year. If yes, the organization is subject to a 21 percent excise tax under IRC Section 4960 and must answer 'yes' to Part V, line 15.
Covered employees include current and former employees who are among the five highest-compensated employees for the taxable year or who were covered employees for any preceding taxable year beginning after December 31, 2016. Organizations with Section 4960 tax exposure must also file Form 4720 and complete Schedule N, reporting the excise tax calculation.
Step 7: Complete Part IV (Officers, Directors, Trustees, Key Employees) and Compensation Tables
List all officers, directors, trustees, and key employees, entering their name, average hours per week, reportable compensation (Form W-2 box one or Form 1099-MISC box 7, whichever is higher), health benefits, deferred compensation, and other compensation. Enter zero compensation for any individual not compensated by the organization. For the five highest-compensated independent contractors, report their names, business addresses, the type of service provided, and compensation for those receiving more than $100,000.
Step 8: Complete Part V (Other Information) with Year-Specific Questions
Answer question 33 (significant activity not previously reported), question 35a (unrelated business gross income of one thousand dollars or more), and question 35b (whether Form 990-T was filed if the answer to 35a is yes). For 2018 filers, answer question 15 regarding Section 4960 tax exposure. Answer question 44a (donor advised funds), 44b (hospital facilities), 44c (indoor tanning services), and 45b (controlled entity transactions within the meaning of section 512(b)(13)). If yes to any question triggering a schedule (indicated by the checklist instructions), verify that the applicable schedule is attached.
Step 9: Complete Part VI (Section 501(c)(3) Organizations Only) and Governance Disclosures
If filing as a section 501(c)(3) organization, complete all Part VI questions 47–49b and lines 50–51 tables regardless of organization size. Verify that Schedule A (Public Charity Status and Public Support) is attached and completed, as all 501(c)(3) organizations must file Schedule A with Form 990-EZ. For organizations answering yes to questions regarding excess benefit transactions (line 40b), political campaign activity (question 35c if applicable), or significant diversion of assets, attach Schedule O with complete explanations.
Step 10: Sign, Date, Verify, and Assemble for Filing by May 15, 2019
The organization’s principal officer or authorized representative must sign Form 990-EZ and enter the signature date. If a paid preparer completed the return, the preparer must sign, date, and provide their PTIN. Ensure that the organization’s name, address, Employer Identification Number (EIN), tax year ending date, and the form checkboxes (initial return, final return, amended return, or group return) are accurately completed on page 1.
Attach all required schedules in alphabetical order: Schedule A (all 501(c)(3) organizations) and any additional schedules (B, C, D, F, G, I, J, L, M, N, O) triggered by yes responses in Part IV. File the completed Form 990-EZ by the fifteenth day of the fifth month following the end of the organization’s tax year (May 15 for calendar-year organizations filing for tax year 2018).
2018 Form 990-EZ Year-Specific Changes
Part V, Line 15: Excise Tax on Executive Compensation (NEW)
Line 15 was added to Part V (Other Information) for 2018 to require organizations to disclose their exposure to the IRC Section 4960 excise tax on payments exceeding $1 million in remuneration or excess parachute payments to covered employees. Before 2018, no such question existed on Form 990-EZ. The new line requires a yes or no response, and if yes, the organization must complete Schedule N and file Form 4720 to calculate and report the excise tax liability.
Part II Balance Sheet: FASB ASU 2016-14 Implementation (UPDATED)
The 2018 Form 990-EZ balance sheet instructions reflect the implementation of FASB ASU 2016-14, which revised net asset classification for nonprofit organizations. The 2018 Form 990-EZ Part II instructions clarify that organizations following ASC 958 (Accounting for Not-for-Profit Organizations) should report line 27 as net assets without donor restrictions and may add a separate line for net assets with donor restrictions if applicable.
Filing Requirements and Extensions
Organizations may request an automatic six-month extension by filing Form 8868 before the original due date, which extends the filing deadline to November 15, 2019, for calendar-year filers. Electronic filing (e-file) was available for Form 990-EZ in 2018. Organizations filing 250 or more returns in a tax year with total assets of $10 million or more were required to file electronically.
Need Help With Your Tax Filing?
If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.
We offer:
- Full IRS transcript retrieval (Wage & Income + Account)
- Professional tax form review
- Preparation & filing support
- Tax relief options if you owe the IRS
Call now before filing: (888) 260-9441
Fast transcript pull available
This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
