Filing taxes for a nonprofit means submitting an annual information return in the Form 990 series to the IRS, even though the organization owes no income tax on its exempt activities. Which version you file depends on your size, and separate returns apply if you have employees or earn income from a business unrelated to your mission. Miss the return for three years in a row and the IRS automatically revokes your exempt status.
Pick the Right Form 990 for Your Size
Before anything else, you need two numbers from your books: gross receipts (everything the organization took in, before expenses) and total assets at year-end. Those numbers decide which return you file.
- Form 990-N (e-Postcard). Gross receipts normally $50,000 or less. It is a short electronic notice filed through the IRS portal. Private foundations cannot use it.1Internal Revenue Service. Annual Electronic Filing Requirement for Small Exempt Organizations – Form 990-N (e-Postcard)
- Form 990-EZ. Gross receipts under $200,000 and total assets under $500,000. You must meet both thresholds. Exceeding either one pushes you to the full return.2Internal Revenue Service. Exempt Organization Annual Filing Requirements Overview
- Form 990. Gross receipts of $200,000 or more, or total assets of $500,000 or more. This is the long-form return with detailed financial, governance, and compensation disclosure.2Internal Revenue Service. Exempt Organization Annual Filing Requirements Overview
- Form 990-PF. Every private foundation, regardless of size.3Internal Revenue Service. Annual Filing and Forms
If you file Form 990 or 990-EZ as a 501(c)(3), Schedule A goes with it to demonstrate public charity status. Schedule B lists significant contributors; the general threshold is $5,000, but public charities meeting the 33⅓% public support test only list contributors whose $5,000-plus gift also exceeds 2% of total contributions. Names and addresses of donors go to the IRS but are not part of the public copy for public charities.4Internal Revenue Service. Instructions for Schedule B (Form 990) Other schedules attach only if their triggers apply: Schedule C for lobbying or political activity,5Internal Revenue Service. Instructions for Schedule C (Form 990) Schedule F for foreign activities or foreign investments of $100,000 or more,6Internal Revenue Service. Form 990 Filing Tips – Reporting Foreign Activities (Schedule F) Schedule L for certain insider transactions, and others depending on what the organization did during the year.
When the Return Is Due
Your Form 990 series return is due on the 15th day of the fifth month after your fiscal year ends.7Internal Revenue Service. Annual Exempt Organization Return Due Date For a calendar-year organization, that is May 15.8Internal Revenue Service. Exempt Organization Filing Requirements – Form 990 Due Date
Need more time? File Form 8868 before the original deadline and you get an automatic six-month extension. No explanation required. One catch: the extension only delays the return. Any unrelated business income tax owed on Form 990-T is still due by the original date, and paying late while the return sits on extension is a common and avoidable mistake.7Internal Revenue Service. Annual Exempt Organization Return Due Date
File Electronically
The Taxpayer First Act made e-filing mandatory for almost every 990 series return. Form 990 and Form 990-PF have been e-file only for tax years beginning after July 1, 2019. Form 990-EZ joined the requirement for tax years ending July 31, 2021 and later.9Internal Revenue Service. Filing Procedures – Certain Organizations Required to File Electronically For most nonprofits, paper is no longer an option. Form 990-N filers submit directly through the IRS’s own portal and do not need third-party software.
Unrelated Business Income and Form 990-T
Exempt status does not make every dollar you earn tax-free. Income from a trade or business that the organization carries on regularly, and that is not substantially related to its exempt purpose, is taxable. A museum gift shop selling books tied to its exhibits is likely related. That same museum renting its lot to weekday commuters probably is not.
Several categories are carved out even when they otherwise qualify: activities where substantially all the work is done by unpaid volunteers, sales of donated merchandise, activities run primarily for the convenience of members, students, or employees, and passive income such as dividends, interest, royalties, and most rent from real property.
If your organization earns $1,000 or more of gross income from unrelated business activities in a tax year, file Form 990-T separately from the annual information return. Corporations pay a flat 21% on the taxable amount; trusts pay the progressive trust rates, which climb faster than most people expect.10Internal Revenue Service. Form 990-T – Exempt Organization Business Income Tax Return And if you expect to owe $500 or more, quarterly estimated payments are required, the same as for any corporation or trust.11Internal Revenue Service. Estimated Tax – Unrelated Business Income
Payroll Taxes Still Apply
Exempt status covers income tax on exempt activities. It does not cover employment taxes. If you have employees, you withhold federal income tax from wages and pay the employer share of Social Security and Medicare. Some exempt organizations also owe federal unemployment tax.12Internal Revenue Service. Employment Taxes for Exempt Organizations These are reported on Form 941 each quarter and Form 940 each year, not on the 990. From the first paycheck onward, the organization is an employer with the same obligations as any for-profit business.
Register in the States Where You Solicit
Federal is only half of it. Most states require nonprofits to register before soliciting donations from residents, and most require ongoing financial reports after that.13Internal Revenue Service. Charitable Solicitation – State Requirements Some states exempt religious organizations or very small charities, but the rules vary widely, and some local governments layer their own registration on top. Separately, most states require a corporate annual report with the secretary of state to keep the entity in good standing. Missing those state filings can lead to administrative dissolution of the corporation, which is a problem independent of federal exempt status.
Make the Return Available to the Public
Your annual returns, along with all schedules and attachments, must be available for public inspection for three years starting from the return’s due date (including extensions) or the date it was actually filed, whichever is later. The exemption application (Form 1023 or 1024) must also be available.14Internal Revenue Service. Public Disclosure and Availability of Exempt Organization Returns and Applications Posting the return on your website satisfies most copy requests, but you still have to allow in-person inspection at the principal office during business hours. Public charities do not have to include donor names and addresses from Schedule B in the copy they make public.
Ignoring a disclosure request costs $20 per day per return, up to $10,000, and a willful failure adds a separate $5,000 penalty.15Internal Revenue Service. Political Organization Filing Requirements – Penalties for Failing to Make Forms 990 Publicly Available
What Happens if You File Late or Not at All
Late or incomplete returns trigger daily penalties. For most organizations, the IRS charges $20 per day, capped at the lesser of $10,500 or 5% of gross receipts for the year. Organizations with gross receipts above $1,000,000 face a statutory base of $100 per day, capped at $50,000.16Internal Revenue Service. Annual Exempt Organization Return – Penalties for Failure to File17Office of the Law Revision Counsel. 26 USC 6652 – Failure to File Certain Information Returns, Registration Statements, Etc. These figures are adjusted for inflation each year, so check the current instructions.
If the IRS sends a demand letter and the return still is not filed by the date in the letter, individual officers or managers responsible for the filing can be personally penalized $10 per day, up to $5,000. Board members rarely think about that personal exposure until it lands.16Internal Revenue Service. Annual Exempt Organization Return – Penalties for Failure to File
Late Form 990-T has its own penalty: 5% of the unpaid tax per month, up to 25%, plus interest on the tax itself.18Office of the Law Revision Counsel. 26 USC 6651 – Failure to File Tax Return or to Pay Tax Form 990-N carries no late-filing penalty, but a missed 990-N still counts toward the three-year revocation clock.
The Three-Year Rule
The worst outcome is not a fine. Miss the required return or notice for three consecutive years and the IRS automatically revokes tax-exempt status. There is no warning letter and no appeal. Revocation takes effect on the original due date of the third missed return, and the organization is then treated as a taxable entity going forward.19Internal Revenue Service. Automatic Revocation of Exemption
Reinstatement is possible through one of four IRS procedures, but each one requires filing all the missed returns, submitting a new exemption application with the applicable user fee, and in most cases writing a reasonable cause statement covering one or all three of the missed years.20Internal Revenue Service. Automatic Revocation – How to Have Your Tax-Exempt Status Reinstated Current user fee amounts appear in the IRS’s annual revenue procedures.21Internal Revenue Service. User Fees for Tax Exempt and Government Entities Division Organizations that stumble into revocation through inattention often spend thousands in professional fees to climb back out. Filing the 990 on time every year is by far the cheaper path.