How to File Form 990-T (2013) for Tax-Exempt Groups

Checklist

Form 990-T (2013) is an IRS tax form used by tax-exempt nonprofits, private foundations, and nonexempt charitable trusts that generate unrelated business taxable income under Internal

Revenue Code Section 511. It is part of the Form 990 Series of Information Returns, required by the Internal Revenue Service for federal tax filings.

Understanding Form 990-T for Taxable Year 2013

Organizations recognized as tax-exempt under IRC Section 501(a) must file IRS Form 990-T when gross income from unrelated business activities equals or exceeds $1,000 during the taxable year. This filing requirement applies even when the organization otherwise files Form

990, Form 990-EZ, Form 990-N (e-Postcard), or Form 990-PF.

Form 990-T ensures unrelated business income is taxed without affecting tax exemptions tied to the organization’s primary exempt purpose. These nonprofit tax returns are governed by federal tax code provisions distinct from small business tax returns.

Step-by-Step Filing Checklist

1. Step 1: Gather Required Documentation

   Collect accounting records and financial reporting documents that identify unrelated business income earned during the 2013 fiscal year. Include Forms W-2, 1099-MISC, 1099-NEC,

   Schedule K-1, and internal accounting records from accounting software used to track financial activities.

2. Step 2: Confirm Filing Obligation and Entity Status

   Verify your organization’s classification using the original determination letter issued by the

   Internal Revenue Service with Form 1023 or Form 1024. Confirm whether your entity is a public charity, private foundation, or nonexempt charitable trust subject to Unrelated Business Income

   Tax rules.

3. Step 3: Calculate Gross Unrelated Business Income

   Report gross receipts from unrelated activities on Part I, Line 1a of Form 990-T. Exclude income substantially related to the exempt purpose, consistent with IRC Section 512 and applicable

   Taxpayer First Act guidance.

4. Step 4: Allocate and Report Allowable Deductions

   Deduct ordinary and necessary expenses directly connected to unrelated business activities.

   Allocate shared costs between exempt and nonexempt functions using reasonable allocation methods supported by accounting records and consistent with the tax code.

5. Step 5: Apply Charitable Contribution and Tax Deduction Limits

   Calculate allowable tax deductions under IRC Section 512, depending on whether the filer is a corporation or trust. Apply percentage limitations correctly to avoid overstating deductions on nonprofit tax returns.

6. Step 6: Complete IRC Section 512 Modifications

   Prepare Part II to adjust net income for excluded items such as qualified interest, royalties, rents, and dividends. Properly remove items excluded from unrelated business income under

   Internal Revenue Code provisions.

7. Step 7: Report Controlled Organization Income

   Complete Schedule F to report interest, annuities, royalties, or rents from controlled organizations under IRC Section 512. Ensure ownership thresholds exceeding 50 percent are documented accurately.

8. Step 8: Attach All Required Schedules

   Attach Schedule A for cost of goods sold, Schedule C for rental income, Schedule E for debt-financed income, Schedule F for controlled organization payments, and Schedule B if required for contributor disclosure. Verify that all item files are complete before submission.

9. Step 9: Compute Tax Liability Using 2013 Rates

   Calculate unrelated business taxable income on Part III and apply graduated corporate tax rates in effect for the 2013 tax year under IRC Section 11. Confirm calculations align with federal tax requirements applicable to the taxable year.

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10. Step 10: Claim the Specific Deduction

    Apply the $1,000 specific deduction allowed under IRC Section 512 when determining final tax liability. Maintain documentation supporting eligibility, especially for organizations with multiple unrelated activities.

    Filing Method, Payments, and Record Retention

    File Form 990-T as a PDF file using digital formats approved by the IRS, typically viewed or completed using Adobe Acrobat. Submit any required tax payments separately, as direct deposit options do not apply to Form 990-T. Retain filed returns for public inspection and potential review through tools such as Nonprofit Explorer or Charity Navigator or during a Federal Audit

    Clearinghouse review.

    Filing Deadlines and Extensions

    File Form 990-T by the 15th day of the fifth month after the close of the fiscal year. Request an automatic extension by the extension deadline using Form 8868. Carefully track prior-year filings, as failure to file can result in automatic revocation of tax-exempt status.

    Common Filing Errors to Avoid

    Misapplying unrelated business income rules, attaching incorrect schedules, or misunderstanding graduated tax rates are common errors during tax season. Incomplete financial reporting, missing audit report references, or inconsistent accounting records increase audit risk and user fees associated with corrective filings.

    Help and Additional Resources

    Use the IRS “Find Help” tools, including the search button and column heading filters, to view more information related to IRS forms and filing requirements. Consult Nonprofit Management professionals and official IRS guidance for complex situations involving Unrelated Business

    Income Tax or multi-activity reporting.

    If you’re missing tax documents or want to ensure the numbers you enter match IRS records, we can help.