Filing taxes is challenging for any business, and it can be especially tricky for nonprofit organizations. Even if your nonprofit is tax-exempt, there’s a chance you’ll need to provide the IRS with an informational return, also known as Form 990. This allows the government to review your financials and the previous year’s achievements. Organizing and filing this type of return is significantly different from traditional business tax returns so that you may need the help of an accountant.

What to Know About Filing Taxes as a Nonprofit

Which Form 990 is required?

Several versions of Form 990 exist, and the one your nonprofit must file is based on its gross receipts. For example, smaller organizations with less than $50,000 in gross receipts should submit Form 990-N, and a nonprofit making more may need to fill out Form 990-EZ. Since your accountant has as a grasp on your finances, they should know which file to complete.

What information is necessary for completing Form 990?

Regardless of which form you’re filing, be prepared to provide standard information about the organization. This includes the nonprofit’s legal name and mailing address as well as its employer identification number and the total value of gross receipts. Having all of these details organized and readily accessible to your accountant will make tax preparation quicker.

Are there penalties for filing late?

Nonprofits with less than $1,000,000 in gross receipts may be fined $20 for each day the return is late. Organizations with more than $1,000,000 in gross receipts may face a fine of $100 per day. Failing to file for three consecutive years will automatically cause a nonprofit to lose their tax-exempt status, and there isn’t an option to appeal.

Do I pay taxes if my organization is tax-exempt?

While tax-exempt nonprofits aren’t obligated to pay federal, sales, or property tax, they’re responsible for paying employee taxes, as for-profit businesses do. Additionally, if an organization engages in activities unrelated to its main purpose, taxes will be due on any income that was generated.

If you have additional questions about your nonprofit tax filing, contact the experienced accountants at James & Associates, CPAs, in Wailuku, HI. These trustworthy professionals understand the unique tax requirements for nonprofits and will ensure your documents are completed accurately and according to IRS guidelines. Learn more about their tax preparation services online, or call (808) 244-2030 to schedule an appointment.