Discover the Form 990-EZ: its purpose, who should file it, deadlines, form sections, filing process, what to do in case of errors or late filing, best practices, and common mistakes to avoid.
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Each year, nonprofits have to file Form 990 to fulfill their reporting requirements.
There are five different versions available to file, and in this article, we’ll discuss all you need to know about the 990 EZ Form, including:
Sound good? Let’s dig in!
As mentioned above, Form 990 is a public document that tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations are required to file with the IRS annually.
Typically, this form provides information about an organization’s finances, governance, programs, and other compliance requirements so that they can maintain their tax-exempt status.
There are five different types of Form 990s, each with different requirements and purposes:
The 990 EZ Form is for small- to medium-sized nonprofits. It asks for critical information like:
This document provides the IRS with the information necessary to prove your exempt status. It is also publicly available, and many potential funders can look it up to see your organization’s financial information, details about your operations, and more.
For more on how to read a Form 990, check out this guide.
The Form 990 EZ is a streamlined version of the standard 990.
The 990 EZ Form is for small- to medium-sized organizations that have gross receipts of less than $200,000 and less than $500,000 in total assets at the end of the year.
This includes:
If you do not meet these criteria, you’ll need to file a different iteration of the Form 990.
The 990 EZ Form is due on the 15th day of the 5th month after your organization’s accounting period ends. For some organizations, this is the calendar year, which would mean the date to file by is May 15.
If the date falls on the weekend or on a holiday, you can file by the next business day without penalty.
Detailed Examination of 990-EZ Form
The 990 EZ Form is a four-page document with six different sections and 52 line items that you need to fill out. We will discuss each section in detail so you can understand what to expect when filing the Form 990 EZ.
The 990 EZ Form starts by asking you to fill out basic information that will help identify your organization, as well as your accounting method and the type of organization you are.
This form is publicly available, and this information makes it easy for others to find your Form 990 EZ.
Part I is a detailed look at your organization’s revenue, expenses, and changes in net assets or fund balances. Be thorough in the amounts that you list in each section, and total it out at the end. This is a short but comprehensive look at your nonprofit’s finances.
The balance sheet helps show your organization’s total assets, liabilities, and net assets or fund balances. You may also use a Schedule O to respond to these questions if applicable.
In this section, you will enter the purpose of your organization and any key accomplishments for your three largest programs. Make sure to include the services provided, who benefitted from the services, expenses, and all other relevant details to highlight the program’s impact.
You need to list out information of key personnel at your organization, even if they are not compensated. Make sure to list them out in this section, and include:
If these do not apply, please enter 0.
There are 17 questions that are part of this section, and you are required to check yes or no. In some cases, you will need to fill out additional information, including:
These questions may help determine if you need to file additional forms.
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This section is only required to be filled out by 501(c)(3) organizations. It asks a series of questions to determine if any of your activities were a violation of your exempt status, as well as information about employee and contractor salaries that exceed $100,000.
The last step to filling out the 990 EZ Form is to sign and date it. The person preparing the document must also sign and date, and you can select if the IRS can discuss the form with them.
Once it is signed, the Form 990 EZ is ready to be filed.
Procedure to File 990-EZ Form
You are required to e-file your 990-EZ Form. You cannot mail it in.
The steps to file are as follows.
This document will be made publicly available, so it’s critical that you file it correctly.
Only tax-exempt organizations, nonexempt charitable trusts, and political organizations outlined by section 527 are eligible to file the Form 990 EZ as long as they meet the following criteria:
All other nonprofits will have to file another version of Form 990.
Thankfully, you are able to file the Form 990 EZ online. You will need to use an authorized IRS e-File provider to do so. This list is constantly updated, so check back for new information.
The deadline to file your Form 990 EZ varies based on your accounting year.
You must file no later than the 15th day of the 5th month following the close of your year. For many, that will be May 15, but not for all. The tax year does not always coincide with the calendar year.
You could be subject to serious fines and penalties if you do not file your 990 EZ Form.
Penalties can apply if the form is incorrectly filled out, so it’s best to partner with a tax professional to ensure it is done properly.
You may correct any mistakes that you find on your Form 990 EZ by filing an amended return. Keep in mind that you could be subject to penalties and fines based on the errors.
Best Practices for Filing the 990-EZ
Here are some best practices to keep in mind when filing your 990-EZ form.
It’s up to you to make sure that you have all the necessary information ready to make tax season as smooth as possible. This includes having balance sheets, receipts, and more in a centralized location ready to turn over at the end of the year.
|While you can file an amended return, it’s best that it’s correct from the start. Potential funders look up 990s to learn more about organizations, and if yours is riddled with mistakes, they may think twice before partnering with you. Even worse, they may not be able to find you at all!
It is critical that you submit your EZ 990 form on time. If not, you will be subject to fines and penalties. If you are in danger of being late, you should simply file an extension.
After your 990 is filed, make sure that you keep a record for yourself. This will help you stay organized and you can reference it if needed.
Common Mistakes to Avoid When Filing Form 990-EZ
Now that you know some of the best practices, let’s discuss some of the common mistakes to avoid when filing a Form 990 EZ.
Incorrect information can lead you to pay fines and penalties once the IRS catches up with you. Additionally, potential funders or donors may not be able to find you if your information is incorrect.
Filing late is almost like throwing money out the window. You could be subject to serious fines that could devastate your budget and seriously impact the difference you’re able to make.
Failure to file not only leads to fines but it could also cost you your nonprofit status. No matter how late you are, it’s better to file than skip it altogether.
Having incorrect information on your documents could lead you to lose your exempt status. Your resources are precious, and you want to make sure that you calculate your gross receipts correctly to ensure you’re properly using them and painting a clear picture of your organization’s operations.
Wrapping Up: The Next Steps
The 990 EZ Form is a tax document that small- to medium-sized nonprofits are required to file at the end of their tax year. It helps show you’re doing what you need to with your resources to maintain your exempt status year after year.
Instrumentl has many free resources available for nonprofits to explore and learn from, including blogs, e-books, webinars, and so much more. You can find your next big grant with Instrumentl, so sign up for your free, 14-day trial today to experience its benefits firsthand.
The 990-EZ form is used by certain tax-exempt organizations, non-profits, and charities to provide the IRS with information about their financial activities and compliance with tax regulations. It is a simpler version of the full 990 form.
Organizations with gross receipts of less than $200,000 and total assets of less than $500,000 at the end of the tax year are eligible to file the 990-EZ form. This includes small non-profits and certain tax-exempt organizations.
The 990-EZ form includes sections on revenue, expenses, net assets, organizational activities, and compliance with public charity status. Each section helps the IRS assess the organization's operations and financial health.
The 990-EZ form is typically due on the 15th day of the 5th month after the organization's fiscal year ends. For example, if the fiscal year ends on December 31, the form is due on May 15 of the following year.
If an organization fails to file the 990-EZ form for three consecutive years, it risks losing its tax-exempt status. Additionally, penalties may be imposed for late filings or failure to file.
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