Quickly e-file Annual Tax Exempt Returns 990-N & 990-EZ

Beginning in 2008, IRS prescribed a new requirement for small tax exempt organizations - Form 990-N (e-Postcard). Small tax-exempt organizations, whose gross receipts are normally less than $50,000, are required to file Form 990-N (e-Postcard). Organizations can also meet this annual filing requirement by filing Form 990-EZ or 990 instead.

What Is Small Tax Exempt Organization?

Small tax-exempt organizations are 501(c)(3) nonprofit organizations recognized as tax exempt by virtue of its charitable programs. Here, the 501(c)(3) tax exemptions is applicable to entities which are operated and organized exclusively for charitable, religious, literary, scientific, or educational purpose or for testing for public safety or for the prevention of cruelty to animals or children. It even applies to any unincorporated fund, cooperating association or foundation which are exclusively operated and organized for these purposes.

How Small Tax Exempt Organizations Apply For Tax Exempt Status?

For being recognized as exempt from federal income tax, organizations need to File 990 Forms to apply for recognition of exemption. To be recognized as exempt under the section 501(a), organizations need to file an application for recognition of exemption with the IRS. The majority of the organization apply for this exemption under the section 501(a) using Form 1024. Most organizations use Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code. If your organization is small, you may qualify for Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code.

Qualifying For Tax Exempt Status Without Filing An IRS Application

There are few kinds of nonprofits which are in the unique position to be able to qualify as tax-exempt Section 501(c)(3) charitable organization, and that too without applying to the IRS. These organizations are -

  • Small nonprofits having annual gross receipts under $5,000.
  • Integrated auxiliaries of churches, and conventions.

Donations to such organizations are tax deductible even though the nonprofit status is not obtained or applied for, even getting a determination letter from the IRS. Frankly, this can be seen as a huge benefit for you as qualifying with the IRS simply involves filing complicated tax exemption application form (which is nothing but Form 1023), paying the filing fees and waiting for the acknowledgment from the IRS.

A nonprofit doesn’t need to file the Form 1023 with the IRS if the annual gross receipts are less than $5,000. Here gross receipts mean the total amount of income received by the nonprofit from all sources during a given annual accounting period, without deducting any expenses or costs.

What Are The IRS Rules For Filing For Small Nonprofits

All the rules which are applicable to the nonprofit tax filing are related to nonprofits who are formally recognized as 501(c)(3) by the IRS are applicable to the mini-nonprofits and churches. Among other things, it simply means that

  • The nonprofit’s net earnings will not inure to the benefits of shareholders or private individuals.
  • Nonprofits might not intervene in political campaigns
  • No substantial part of the nonprofit tax filings activity attempts to influence the legislation.

What Is 990-N & 990-EZ?

Many of the small tax-exempt organizations whose annual gross receipts are less than $50,000 or can easily satisfy their annual reporting requirements by e-filing Form 990-N if they don’t file 990-EZ or Form 990.

Filing 990-N

  • The organization needs to be a 501(c)(3) approved organization or it needs to be included in the IRS database for filing.
  • The gross revenues of the firm for the past year need to be less than $50,000.
  • You can file 990-N for the current reporting year and prior two years.
  • The Form 990-N can only be submitted online. There is no option for paper filing.

Compared to the 990-N, to file 990-EZ is more complicated and it has detailed information regarding your organization and its activities for the previous year.

A Tax Exempt Organization qualifies to file 990-EZ if -

  • The gross revenues of the organization for the past year are less than $200,000.
  • The total assets of the organization is less than $500,000

File Form 990-N in 3-simple steps with epostcard990.com

Advantages Of Filing 990-N

  • It is one of the less complicated methods of reporting the business activities.
  • It remains in compliance with the IRS especially when the organization hasn’t raised funds for the past year.

Disadvantages Of Filing 990-N

  • Form 990-N doesn’t display any information to potential donors on various financials or activities or accomplishments of the firm.
  • Organizations providing grant often request for Form 990-EZ from the 501(c)(3) firms who are seeking the grant.

Advantages of Filing 990-EZ

  • The Form 990-EZ is perfect for the organizations who are planning on applying for grants.
  • It provides the required information regarding its activities.
  • Certain states need you to file 990-EZ for registering the solicitation registrations.

Disadvantages Of Filing 990-EZ

  • Compared to the 990-N, this is more complicated and you might end up taking the professional expertise and help.