Keeping your nonprofit’s tax filings in order is crucial for maintaining your tax-exempt status and building trust with donors. This guide unravels the complexities of nonprofit tax returns, explaining deadlines, forms, and how to avoid penalties.
Understanding Due Dates
The due date for your nonprofit’s tax return hinges on your fiscal year. Don’t worry if you’re unsure! Check your IRS Determination Letter (upper right corner) for the “Accounting Period Ending,” which indicates your fiscal year.
- Calendar Year Nonprofits (Jan 1 – Dec 31): File by May 15th, unless it falls on a weekend or holiday (then, the next business day).
- Fiscal Year Nonprofits: File by the 15th day of the fifth month after your fiscal year ends. (Example: July 31st fiscal year-end = December 15th deadline). Weekends or holidays push the deadline to the next business day.
Choosing the Right Form
Not all nonprofits wear the same tax garb! The form you need depends on your annual revenue:
- Form 990-N (Electronic Notice): A breeze for small nonprofits with annual gross receipts under $50,000. It’s electronically submitted via the IRS website – no paper forms here! While eligible for 990-N, you can choose the more comprehensive 990 or 990-EZ instead.
Important Note: Electronically filing is mandatory for all exempt organization returns.
- Form 990-EZ: Perfect for mid-sized nonprofits with annual gross receipts between $50,000 and $200,000. This condensed version of the full Form 990 is around four pages long.
- Form 990: The big leagues! This comprehensive 12-page form is required for nonprofits exceeding $200,000 in annual gross receipts.
- Form 990-PF: Private foundations, regardless of size, must use this 13-page form. It delves deeper into grantmaking and relationships with other 501(c)(3) organizations.
Need More Time?
Don’t panic if the deadline looms! Form 8868 grants a six-month automatic extension. Remember, this extends filing time, not tax payment time if applicable. The IRS encourages electronic filing for extensions, but paper filing with proof of mailing is also an option.
Late Filing Penalties: Ouch!
Missing the deadline (including extensions) comes with a $20 per day penalty. Inaccurate or incomplete information incurs the same penalty. There’s a maximum penalty for any return, the lesser of $10,500 or 5% of your organization’s annual gross receipts. However, reasonable cause for late filing can lead to penalty abatement.
Three Strikes and You’re Out!
Failure to file for three consecutive years results in automatic revocation of your tax-exempt status. This takes effect on the original filing due date of your third delinquent return.
State Filings: A Patchwork of Requirements
Each state has its own set of filing requirements for tax-exempt organizations. Some may require more detailed information or additional forms alongside your federal Form 990. Check your state government website for specifics on:
- Charity registration
- Taxation
- Information for employers
The IRS also provides a handy list of state filing requirements.
Beyond Federal Filings
Nonprofits with employees have federal and state employment tax filing obligations. Additionally, some states may impose sales tax requirements. These topics are beyond the scope of this article, but it’s vital to be aware of them.
Seeking Help? We’re Here!
Navigating nonprofit tax filings can feel overwhelming. Don’t hesitate to contact our office for assistance in ensuring your organization meets all filing requirements and maintains its tax-exempt status. Remember, a proactive approach keeps you compliant and allows you to focus on your mission!
