Demystifying IRS Form 990-EZ: What Nonprofits Should Know

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:

• What it is, who needs to file it, and when it’s due
• What each section of the form means
• How to file, what happens if something is wrong, and what to do if you file late
• Best practices to file the Form 990 EZ and common mistakes to avoid

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:

• Form 990
• Form 990-BL
• Form 990-N
• Form 990-PF
• Form 990-T

The 990 EZ Form is for small- to medium-sized nonprofits. It asks for critical information like:

• Name and EIN of the organization
• Revenue, expenses, and changes in net assets or fund balances
• Balance sheets
• Statements of accomplishments
• List of employees and compensation

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.
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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:

• Tax-exempt organizations
• Nonexempt charitable trusts (as long as they’re not treated as a private foundation)
• Political organizations as outlined by section 527

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.

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.

1. Basic Information

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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.

2. Part I: Revenue, Expenses, and Changes in Net Assets or Fund Balances

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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.

3. Part II: Balance Sheets

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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.

4. Part III: Statement of Program Service Accomplishments

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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.

5. Part IV: List of Officers, Directors, Trustees, and Key Employees

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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:

• Name and title
• Average hours worked
• Compensation
• Benefits
• Any additional compensation

If these do not apply, please enter 0.

6. Part V: Other Information

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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:

• Tax amounts
• The state you’re filing in
• Where the books for your organization are kept

These questions may help determine if you need to file additional forms.

7. Part VI: 501(c)(3) Organizations Only

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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.

8. Sign and Date the Form

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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.

You are required to e-file your 990-EZ Form. You cannot mail it in.

The steps to file are as follows.

1. Gather all your information.
2. Locate an authorized IRS e-file provider from this list.
3. Share your documentation, and the e-filer will fill out the 990-EZ form for you, which is located here.
4. Verify all information is correct and sign and date the document.
5. The e-file provider will submit on your behalf.

This document will be made publicly available, so it’s critical that you file it correctly.

Eligibility to File 990-EZ Form

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:

• Small- to medium-sized organization
• Gross receipts less than $200,000
• Total assets less than $500,000

All other nonprofits will have to file another version of Form 990.

Online Filing of 990-EZ Form

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.

Deadline for Filing 990-EZ Form

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.

Consequences of Failing to File 990-EZ Form

You could be subject to serious fines and penalties if you do not file your 990 EZ Form.

• Gross receipts <$1,129,000: Penalty of $20/day of up to $11,000 or 5% of the gross receipts, whichever is smaller.
• Gross receipts >$1,129,000: Penalty of $110/day of up to $56,000.

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.

Correction of Errors on the 990-EZ Form

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.

Here are some best practices to keep in mind when filing your 990-EZ form.

Preparing the Necessary Information

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.

Checking for Accuracy

|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!

Ensuring Timely Submission

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.

Keeping a Copy for Record-keeping

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.

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.

Filing With Incorrect Information

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.

Late Filing

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.

Not Filing at All

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.

Incorrect Calculation of Gross Receipts

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.

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.

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