Form 990 Tax Year 2018 Filing Checklist
Year-Specific Context
Form 990 for 2018 introduces Section 4960 excise tax reporting on covered employees earning over $1,000,000 annually, implements TCJA-required separate unrelated business taxable income computation for multiple unrelated trades or businesses, and restricts Schedule B donor disclosure requirements to 501(c)(3) and 527 organizations only. These changes mark significant shifts in substantive compliance for tax-exempt entities.
Section 4960 excise tax applies to applicable tax-exempt organizations that pay any covered employee more than $1,000,000 in remuneration or pay excess parachute payments for tax years beginning after December 31, 2017. Organizations must report this liability on Form 4720 and answer Part V, line 15 on Form 990. The Tax Cuts and Jobs Act requires organizations with multiple unrelated trades or businesses to compute unrelated business taxable income separately for each company, effective for tax years beginning after December 31, 2017.
Schedule B reporting changes under Revenue Procedure 2018-38 eliminate donor name and address disclosure requirements for all tax-exempt organizations except 501(c)(3) and 527 entities for tax years ending on or after December 31, 2018. Organizations described in 501(c)(3) or 527 must continue to complete Schedule B and report the names and addresses of contributors worth $5,000 or more. All other tax-exempt organizations must report contribution amounts over $5,000 on Schedule B, but need not report contributor names or addresses. All organizations must maintain contributor records internally for IRS inspection upon request, regardless of whether disclosure requirements apply.
Filing Requirements
Organizations must file Form 990 if gross receipts are greater than or equal to $200,000 or total assets are greater than or equal to $500,000 at year-end. Organizations with gross receipts less than $200,000 and total assets less than $500,000 may file Form 990-EZ or voluntarily file Form 990. Organizations with gross receipts of normally $50,000 or less may submit Form 990-N unless they are section 509(a)(3) supporting organizations, sponsoring organizations of donor-advised funds, or controlling organizations under section 512(b)(13) with fund transfers during the year.
Organizations that file at least 250 returns of any type during the calendar year ending with or within the organization’s tax year and have total assets of $10 million or more at year-end must file Form 990 electronically. Organizations that do not meet these thresholds may voluntarily file electronically.
Ten-Step Filing Checklist
Step 1: Determine Filing Requirement and Gather Core Documents
Verify the organization has gross receipts greater than or equal to $200,000 or total assets greater than or equal to $500,000 at tax year-end. Section 509(a)(3) supporting organizations must file Form 990, regardless of gross receipts. Collect complete financial records covering all 2018 calendar year or applicable fiscal year transactions, including the general ledger, cash receipts and disbursements, bank statements, investment statements, grant records, contribution documentation, and payroll records, including W-2 and 1099-MISC forms for all compensated individuals.
Step 2: Identify Compensation Reporting Requirements
Compile Part VII information for all current officers and directors, regardless of compensation. List up to 20 key employees with reportable compensation exceeding $150,000 from the organization and related organizations. List the five highest compensated employees receiving over $100,000 in reportable compensation not otherwise listed. Report former directors or trustees receiving over $10,000 in their capacity as former directors or trustees.
List the five highest-paid independent contractors receiving over $100,000 in compensation. Reportable compensation includes amounts reported in Box 5 of Form W-2 and Box 7 of Form 1099-MISC.
Step 3: Follow the IRS Sequencing List for Core Form Completion
Complete heading items A through F and H(a) through M. Determine related organizations for Schedule R. Identify Part VII individuals. Complete Parts VIII, IX, and X with financial statements. Complete Item G in the heading. Complete Parts III, V, VII, XI, and XII. Determine and complete applicable schedules. Complete Part VI governance section. Complete Part I summary based on data from other parts. Complete Part IV schedule checklist. Complete Schedule O, which is required for all filers.
Step 4: Report Executive Compensation and Section 4960 Excise Tax
Answer Part V, line 15, regarding whether the organization is subject to Section 4960 excise tax on payments of more than $1,000,000 in remuneration or excess parachute payments during the year. If yes, the organization must file Form 4720 to report and pay the 21 percent excise tax.
Complete Schedule J to report the compensation breakdown for individuals listed on Part VII, line 1a, with reportable compensation exceeding $100,000. Report calendar year compensation for all listed individuals.
Step 5: Calculate and Report Unrelated Business Income
Organizations with $1,000 or more of gross income from any unrelated business must file Form 990-T. Organizations conducting multiple unrelated trades or businesses must compute unrelated business taxable income separately for each trade or business under TCJA requirements effective for tax years beginning after December 31, 2017. Report total unrelated business revenue on Part VIII, column C, line 12. Report net unrelated business taxable income from Form 990-T, line 38 on Part I, line 7b. Unrelated business taxable income is increased by disallowed deductions for qualified transportation fringes, parking facilities, and on-premises athletic facilities under section 512(a)(7).
Step 6: Identify and Attach Required Schedules
Complete Part IV by answering all yes/no questions to determine required schedules. Attach applicable schedules in alphabetical order. Schedule A is required for organizations described in section 501(c)(3) or section 4947(a)(1) nonexempt charitable trusts. Schedule B is required for organizations receiving contributions of $5,000 or more from any single contributor. Schedule C is required for organizations engaged in lobbying or political activities.
Schedule D is required for organizations reporting property, investments, or endowments. Schedule E is required for schools. Schedule F is required for foreign activities. Schedule G is required for fundraising activities exceeding $15,000. Schedule H is required for hospitals. Schedule I is required for grants to individuals or organizations. Schedule J is required for detailed compensation reporting. Schedule K is required for tax-exempt bonds.
Schedule L is required for transactions with related parties. Schedule M is required for noncash contributions exceeding $25,000. Schedule N is required for the disposition of assets. Schedule O is required for all filers to provide supplemental information. Schedule R is required for related organizations.
Step 7: Complete Schedule B Donor Reporting
Organizations described in section 501(c)(3) or section 527 must complete Schedule B and report names and addresses of contributors of $5,000 or more. All other tax-exempt organizations must report contribution amounts over $5,000 on Schedule B but need not report contributor names or addresses per Revenue Procedure 2018-38, which applies to tax years ending on or after December 31, 2018. All organizations must maintain contributor records internally for IRS inspection upon request, regardless of whether disclosure requirements apply.
Step 8: Complete Governance and Compliance Sections
Answer Part VI questions regarding governing body independence, reporting the number of independent voting members as defined in the instructions. Report family and business relationships among officers, directors, trustees, and key employees—report delegation of management duties. Report significant changes to governing documents—report asset diversion. Report whether the organization has members or stockholders and whether members have governance authority. Answer Part V questions regarding federal employment tax return filing, unrelated business income filing, and estimated tax payment requirements. Describe all yes responses and specific no responses requiring explanation in Schedule O.
Step 9: Complete Financial Statements and Reconciliation
Report Part VIII: total contributions, program service revenue, investment income, royalties, rental income, and other revenue. Ensure Part VIII total revenue equals Part I, line 12.
Complete Part IX functional expenses by allocating all expenses across program services, management and general, and fundraising columns. Ensure Part IX total expenses equal Part I, line 18—Report Part X balance sheet with beginning and ending balances for all assets and liabilities.
Ensure Part X total assets equal total liabilities plus net assets. Complete Part XI net asset reconciliation. Complete Part XII financial statements and reporting, indicating whether the organization obtained separate, independent audited financial statements or was included in consolidated statements.
Step 10: Sign, Date, and Verify Completeness
The organization’s authorized officer must sign and date Form 990, Part II, under penalty of perjury, declaring that the return, including the accompanying schedules and statements, has been examined and is true, correct, and complete. If a paid preparer completed the return, the preparer must sign, date, and provide their preparer tax identification number. Verify all required schedules are attached in alphabetical order.
Verify Schedule O is completed. File according to the 2018 IRS Where to File instructions for paper or electronic submission. For calendar year 2018, the return is due May 15, 2019. Organizations may request an automatic extension using Form 8868.
Form Limitations
Form 990 does not permit claims of credits or itemized deductions that are allowed on individual income tax returns. Organizations filing Form 990 cannot claim charitable contributions, dependent care credits, education credits, or earned income credits that are available to individuals. Section 509(a)(3) supporting organizations must file Form 990 even if gross receipts are usually $50,000 or less and cannot file Form 990-N. Controlling organizations described in section 512(b)(13) must file Form 990 if any transfer of funds occurs between the controlling organization and controlled entity during the year.
Private foundations file Form 990-PF, not Form 990. Section 527 political organizations must file Form 990 or Form 990-EZ if gross receipts are $25,000 or more. Qualified state or local political organizations file only if gross receipts are $100,000 or more. Sponsoring organizations of donor-advised funds must file Form 990, not Form 990-EZ.
Key 2018 Changes
Part V, line 15, was added for 2018 to capture organizations subject to the new Section 4960 excise tax on excess executive compensation. This line inquires whether the organization is subject to the Section 4960 excise tax on payments exceeding $1,000,000 in remuneration or excess parachute payments during the year. Section 4960 imposes a 21 percent excise tax on applicable tax-exempt organizations paying covered employees more than $1,000,000 in remuneration or paying excess parachute payments, effective for tax years beginning after December 31, 2017.
Schedule B donor information reporting was redesigned for 2018. Revenue Procedure 2018-38, released July 16, 2018, eliminated the requirement for tax-exempt organizations other than section 501(c)(3) and section 527 organizations to report contributor names and addresses on Schedule B for tax years ending on or after December 31, 2018. Organizations must still report contribution amounts over $5,000 and maintain contributor records for IRS inspection.
Part X instructions reflect financial statement reporting changes under Accounting Standards Update 2016-14, which changes how not-for-profit organizations classify net assets. Organizations must report net assets as either with or without donor restrictions, instead of using the previous classifications of unrestricted, temporarily restricted, and permanently restricted net assets.
Penalties and Compliance
Organizations that file late or incomplete returns face penalties of $20 per day, up to the lesser of $10,000 or 5 percent of their gross receipts for the year, unless they demonstrate reasonable cause. Organizations with annual gross receipts exceeding $1,046,500 are subject to penalties of $100 per day, with a maximum penalty of $52,000 for any one return.
Organizations required to file electronically that instead submit a paper return are considered to have not filed, unless the paper filing reports a name change. Filing an incomplete return includes failing to complete required line items, required parts of schedules, or required schedules.
Organizations failing to file required annual returns for three consecutive years automatically lose tax-exempt status on the third annual return's due date. Responsible persons who fail to file complete returns or furnish correct information after receiving IRS notification face penalties of $10 per day, with a maximum penalty of $5,000 for all individuals for failures related to any one return.
Recordkeeping
Organizations should maintain records supporting all amounts and information reported on Form 990 for at least three years from the later of the filing date or the due date. Organizations must make the completed Form 990 available for public inspection for three years from the filing date or three years from the due date, whichever is later. Schedule B contributor information for section 501(c)(3) and section 527 organizations is generally protected from public disclosure. Schedule B for other organizations filing Form 990 does not include names and addresses, and contribution amounts are also protected from public disclosure.
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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.
