What IRS Form 990-T (2025) Is For

IRS Form 990-T (2025) is used by tax-exempt organizations to report and pay taxes on unrelated business income that is not substantially related to their exempt purpose. The Internal Revenue Code requires organizations that earn $1,000 or more in gross income from unrelated business activities to file this form. It ensures compliance with federal tax law and provides the Internal Revenue Service with transparency regarding how nonprofits generate income beyond charitable activities.

This form applies to nonprofit organizations, charitable organizations, and private foundations that regularly carry on trade or business operations separate from their primary mission. Examples include advertising, rental of debt-financed real estate, or services provided for a fee. Filing IRS Form 990-T (2025) helps maintain an organization’s tax-exempt status by correctly reporting unrelated business income and fulfilling its annual income tax obligations under Internal Revenue Code Sections 511–514.

When You’d Use IRS Form 990-T (2025)

Organizations file IRS Form 990-T (2025) when they earn unrelated business income or must correct prior filings to comply with Internal Revenue Service requirements.

1. Reporting Unrelated Business Income: This form is required when an exempt organization earns at least $1,000 in gross income from activities unrelated to its charitable or educational mission.
   
   
2. Amended or Corrected Returns: This form is used to correct errors, update figures, or claim a refund if amounts from the prior year were overpaid.
   
   
3. Change in Fiscal Year: The form must be filed when an organization changes its fiscal year and must report income for the adjusted period.
   
   
4. Consolidated or Group Filings: Certain regulated investment companies and real estate investment trusts may need to file a consolidated return if multiple entities are under common control.
   
   
5. Loss of Tax Exemption Review: It may be required when the IRS conducts a review to confirm whether an organization continues to qualify for tax-exempt status.

Key Rules or Details for 2025

Each tax-exempt organization must follow specific rules for the 2025 filing year to ensure accurate reporting and continued compliance with the Internal Revenue Service.

1. Unrelated Business Defined: Unrelated business income is income from a trade or business that is regularly carried on and not substantially related to the organization’s exempt purpose.
   
   
2. $1,000 Gross Income Threshold: An exempt organization must file IRS Form 990-T (2025) if it earns $1,000 or more in gross unrelated business income during the tax year.
   
   
3. E-Filing Requirement: To meet federal filing standards, most organizations must file electronically through the IRS e-file system.
   
   
4. Penalty for Late Filing: The Internal Revenue Service may impose a penalty of 5% of unpaid tax per month, up to a maximum of 25%, with a minimum penalty if the return is filed more than 60 days late.
   
   
5. Maintaining Exempt Status: Accurate filing of IRS Form 990-T (2025) helps an organization maintain recognition of its tax-exempt status under the Internal Revenue Code.

Step-by-Step (High Level)

Completing IRS Form 990-T (2025) can be managed efficiently using a structured approach.

1. Gather Financial Data: Collect all records of business income, expenses, assets, and credits related to unrelated activities for the tax year.
   
   
2. Verify Employer Identification Number (EIN): Confirm that the organization’s EIN is accurate and matches other filings, including the annual information return.
   
   
3. Complete the Correct Tax Year Form: Use the 2025 version of IRS Form 990-T to ensure that all figures and schedules correspond with the proper reporting year.
   
   
4. Include Supporting Schedules: Attach Schedule A and any other required statements for each separate business activity to show income and expenses clearly.
   
   
5. Review for Accuracy: Ensure that all entries on Form 990 and Form 990-T are consistent with the organization’s financial records and internal reports.
   
   
6. File Electronically or by Mail: If the organization qualifies for an exception to electronic filing, submit the return through the IRS e-file system or by mail.
   
   
7. Retain Records: Keep copies of filed returns, payment confirmations, and IRS notices for at least three years for reference or in case of an audit.

Common Mistakes and How to Avoid Them

Filing IRS Form 990-T (2025) requires careful attention to detail to prevent errors that could delay processing or affect an organization’s tax-exempt status.

• Combining Multiple Activities on One Schedule: Each unrelated business must be reported separately using its own Schedule A to ensure accurate tracking of income and deductions.
  
  
• Omitting or Misreporting the EIN: Every organization must verify that its employer identification number is correct and consistent across all tax forms.
  
  
• Using the Wrong Tax Year Form: The organization should confirm using the 2025 form to avoid computational errors and rejection by the Internal Revenue Service.
  
  
• Failing to File Form 990 When Required: Organizations that must file both Form 990 and Form 990-T should submit both forms to maintain compliance with annual return requirements.
  
  
• Incorrectly Reporting Expenses or Deductions: Documentation should accurately record and support each expense to calculate unrelated business income tax correctly.
  
  
• Missing the Filing Deadline: To prevent penalties and interest, an organization should file the form by the required due date or request an extension.

What Happens After You File

Once IRS Form 990-T (2025) has been filed, the Internal Revenue Service typically processes electronic submissions within two to four weeks and paper filings within six to twelve weeks. The IRS will send an acknowledgment confirming receipt and may issue a notice if additional tax or documentation is required. If the organization is eligible for a refund, it will be credited to the designated account or issued by check. The IRS will send a balance owing notice with payment instructions if additional tax or interest is due.

FAQs

How does the alternative minimum tax apply to IRS Form 990-T (2025)?

The alternative minimum tax may apply to specific exempt organizations if their unrelated business taxable income triggers additional tax liability. Organizations must compute and pay income tax based on their total annual taxable income.

How is the tax computation determined for IRS Form 990-T (2025)?

Tax computation is based on unrelated business taxable income after deductions, credits, and prior year adjustments. The total income tax depends on applicable rates, proxy tax liability, and qualified business income deductions.

What accounting method should be used when filing IRS Form 990-T (2025)?

Organizations must use the same accounting method for other federal filings, ensuring that income, expenses, and tax payments are reported consistently across all tax years.

Do S corporations need to file IRS Form 990-T (2025)?

S corporations with exempt status may be required to file if they receive unrelated business taxable income or have tax previously deferred from prior operations that becomes taxable in the current year.

Can federal excise taxes paid affect IRS Form 990-T (2025)?

Federal excise taxes paid during the year may reduce the total tax due or apply as a credit toward estimated tax obligations when computing final liability. Organizations should maintain records of all related tax payments for accurate reporting.