Tax Filing Requirements for Nonprofit Organizations

Nonprofit organizations are exempt from paying federal income tax, but they are still required to file annual tax returns with the Internal Revenue Service (IRS). The specific tax form that a nonprofit organization is required to file depends on its size and type of activities.

Which tax form to file 

Most nonprofit organizations are required to file Form 990, Return of Organization Exempt from Income Tax. However, there are a few exceptions: 

• Form 990-EZ: Small nonprofit organizations with annual gross receipts of less than $200,000 and total assets of less than $500,000 may be eligible to file Form 990-EZ, Short Form Return of Organization Exempt from Income Tax. 

• Form 990-N: Nonprofit organizations with annual gross receipts of less than $50,000 may be eligible to file Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required To File Form 990 or Form 990-EZ. 

When to file

Nonprofit organizations are required to file their annual tax return by the 15th day of the fifth month after the close of their fiscal year. For example, a nonprofit organization with a fiscal year ending on December 31 would be required to file its tax return by May 15. 

Tax filing implications 

There are a number of tax filing implications for nonprofit organizations. First, nonprofit organizations that fail to file a tax return on time may be subject to penalties. Second, nonprofit organizations that file a false or fraudulent tax return may be subject to criminal penalties. Third, nonprofit organizations that fail to file a tax return for three consecutive years may automatically lose their tax-exempt status. This means that they would be required to pay income tax on their future earnings. 

In addition, nonprofit organizations should be aware of the following tax filing requirements: 

• Public disclosure: Form 990 and Form 990-EZ are public records, which means that anyone can access them online. 

• Transparency: Nonprofit organizations are required to disclose certain information on their tax returns, such as their financial statements, board member compensation, and lobbying activities. 

• Accuracy: Nonprofit organizations are required to file accurate and complete tax returns. 

Conclusion 

Tax filing can be a complex process for nonprofit organizations. It is important for nonprofit organizations to understand their tax filing requirements and to comply with all applicable laws and regulations. 

Here are some additional tips for nonprofit organizations on tax filing: 

• Start early: Don't wait until the last minute to start preparing your tax return. Give yourself plenty of time to gather all of the necessary information and to complete the form accurately. 

• Keep good records: It is important to keep good financial records throughout the year. This will make it easier to prepare your tax return and to support your claims with documentation.

• Get help from a professional: If you are unsure about how to file your tax return, you may want to consider getting help from a professional tax accountant or attorney. 

By following these tips, nonprofit organizations can ensure that they are complying with their tax filing requirements. This will help them to avoid penalties and to maintain their tax-exempt status.