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Key Takeaways
Management companies, as independent contractors, are reported on Form 990, Part VII (if at all), only in Section B. Independent Contractors, and aren’t reported on Schedule J (Form 990), Part II. If a current or former officer, director, trustee, or key employee has a relationship with a management company that provides services to the organization, then the relationship may be reportable on Schedule L (Form 990), Part IV. A key employee of a management company must be reported as a current officer of the filing organization if he or she is the filing organization’s top management official or top financial official or is designated as an officer of the filing organization. However, that person doesn’t qualify as a key employee of the filing organization solely on the basis of being a key employee of the management company.
If the return isn’t filed by the due date (including any extension granted), provide a reasonable-cause explanation giving the reasons for not filing on time. 538, Accounting Periods and Methods, and the instructions for Forms 1128 and 3115, about reporting changes to accounting periods and methods. Foreign organizations and U.S. territory organizations as well as domestic organizations must file Form 990 or 990-EZ unless specifically excepted under General Instructions, Section B, later. Report amounts in U.S. dollars and state what conversion rate the organization uses.
Forms & Instructions
For purposes of Part VI, line 2, business relationships between two persons include the following. A reimbursement or other expense allowance arrangement that satisfies the requirements of section 62(c) by meeting the requirements of business connection, substantiation, and returning amounts in excess of substantiated expenses. The codes listed in this section are a selection from the North American Industry Classification System (NAICS) that should be used in completing Form 990, Part VIII, lines 2 and 11. Select the most specific 6-digit code available that describes the activity producing the income being reported.
Accounting Periods
- If the organization records depreciation, depletion, amortization, or similar expenses, enter the total on line 22.
- Certain filers must provide narrative responses to other questions (for example, Part III, line 4d; Part V, line 3b; Part VI, lines 2–7b, 9, 12c, and 15a–b, for “Yes” responses; Part VI, lines 8a–b and 10b, for “No” responses; and Part XII, line 3b, for a “No” response).
- Use column (ii) to report sales of all other types of investments (such as real estate, royalty interests, or partnership interests) and all other non-inventory assets (such as program-related investments and fixed assets used by the organization in its related and unrelated activities).
- It is sufficient to enter “family relationship” or “business relationship” without greater detail.
- Special rules apply for reporting reportable compensation and other compensation.
- However, there are certain organizations that are exempt from filing the form.
Unless instructed otherwise, the organization should generally use the same accounting method on the return (including the Form 990 and all schedules) to report revenue and expenses that it regularly uses to keep its books and records. A short accounting period is a period of less than 12 months, which exists when an organization first commences operations, changes its accounting period, or terminates. If the organization’s short year began in 2024, and ended before December 31, 2024 (not on or after December 31, 2024), it may use either 2023 Form 990 or 2024 Form 990 to file for the short year. If using the 2023 return, provide the information for designated years listed on the return, other than the tax year being reported, as if the years shown in the form text and headings were updated. For example, if filing for a short period beginning in 2024 on the 2023 Form 990, provide the information on Schedule A, Part II, for the tax years 2020–2024, rather than for tax years 2019–2023.
For example, amounts paid to an independent contractor for advocacy services that don’t constitute lobbying should be reported here. For health care organizations, payments to health care professionals who are independent contractors are reported on line 11g. Report on line 11g payments to payroll agents, common paymasters, and other third parties for services provided by those third parties to the filing organization. Report on lines 5–10, as appropriate, payments that reimburse third parties for compensation to the organization’s officers, directors, trustees, key employees, or other employees. Report payments to contractors for information technology services on line 14, rather than on line 11g. Enter the employer’s share of contributions to, or accruals under, qualified and nonqualified pension and deferred compensation plans for the year.
This schedule is designed to show, over the past five years, how much the organization has contributed as a percentage of total revenue. There are certain standards an organization must achieve to maintain its not-for-profit status. As mandated by the “Taxpayer Act of 2019,” organizations must file Form 990 electronically for quicker processing. TaxZerone, an IRS-authorized e-file service, offers secure and efficient electronic filing. These sources offer guidance on reading, understanding, and applying Form 990 data.
The description should include an explanation of which persons are covered under the policy, the level at which determinations of whether a conflict exists are made, and the level at which actual conflicts are reviewed. Also explain any restrictions imposed on persons with a conflict, such as prohibiting them from participating in the governing body’s deliberations and decisions in the transaction. Y appoints a majority of the board of directors of Z, a section 509(a)(3) supporting organization that invests funds and makes grants for the benefit of Y. Although Y controls Z, Z isn’t a local affiliate of Y that would require Y to answer “Yes” on line 10a.
B. Organizations Not Required To File Form 990 or 990-EZ
The organization should include contributions made by the filing organization, common paymasters, and payroll/reporting agents to the filing organization’s sections 401(k) and 403(b) pension plans on behalf of employees. However, it shouldn’t include contributions to qualified pension, profit-sharing, and stock bonus plans under section 401(a) solely for the benefit of current or former officers, directors, trustees, key employees, or disqualified persons, which are reportable on line 5 or 6. Enter the payments made by the organization to provide benefits to members (such as payments made by an organization exempt under section 501(c)(8), 501(c)(9), or 501(c)(17) to obtain insurance benefits for members, or patronage dividends paid by section 501(c)(12) organizations to their members). Don’t report on this line the cost of employment-related benefits such as health insurance, life insurance, or disability insurance provided by the organization to its officers, directors, trustees, key employees, and other employees. Report such costs for officers, directors, trustees, and key employees on Part IX, line 5; report such costs for other disqualified persons on Part IX, line 6; and report such costs for other employees on Part IX, lines 8 and 9.
- Examples of insignificant changes made to organizing or enabling documents or bylaws that aren’t required to be reported here include changes to the organization’s registered agent with the state and to the required or permitted number or frequency of governing body or member meetings.
- Is any organization that is described in section 501(c) or (d) and is exempt from taxation under section 501(a).
- An endowment fund created by a donor stipulation (donors include other types of contributors, including makers of certain grants) requiring investment of the gift in perpetuity or for a specified term.
- Publishing a magazine is a program service even though the magazine contains both editorials and articles that further the organization’s exempt purpose as well as advertising, the income from which is taxable as unrelated business income.
We ask for the information on these forms to carry out the Internal Revenue laws of the United States. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. However, certain returns and return information of tax-exempt organizations and trusts are subject to public disclosure and inspection, as provided by section 6104.
Form 990 is the IRS’ primary tool for gathering information about tax-exempt organizations, educating organizations about tax law requirements and promoting compliance. Organizations also use the Form 990 to share information with the public about their programs. Additionally, most states rely on the Form 990 to perform charitable and other regulatory oversight and to satisfy state income tax filing requirements for organizations claiming exemption from state income tax. Section 527 political organizations required to file Form 990 or 990-EZ must, in general, make their Forms 8871, 8872, 990, or 990-EZ available for public inspection in the same manner as annual information returns of section 501(c) organizations are made available. See Public inspection and distribution of applications for tax exemption and annual information returns of tax-exempt organizations, later. Generally, Form 8871 and Form 8872 are available for inspection and printing at IRS.gov/Charities-and-Nonprofits.
What Nonprofits Need to Know About Consultants
If you’re overwhelmed and need more time to file your return, you have the option to file an extension using Form 8868. Filing this form will result in an automatic 6-month extension on your deadline. However, make sure to enter the right information, as incorrect filings can result in your application being rejected. And again, if you fail Accounting For Architects to correct this information within the IRS’s given time frame, you can even incur penalties. Assets include items owned by the organization, such as cash assets, accounts receivable, and property and equipment investments, among other categories. For those of you who have ever been involved with the preparation of a 990 Return of Organization Exempt from Income Tax form, you know it can be 50-plus pages of questions and boxes to check.
