Nonprofit Tax Forms 101: Essential Documents to Know

Many nonprofits are all too familiar with accounting crunch times, whether it’s due to year-end strain or an overwhelming tax season. These situations can be stressful for a number of reasons, namely the high pressure of ensuring all the organization’s forms are filed correctly and on time.

One way to reduce tax-related headaches is to familiarize yourself with essential nonprofit documents. When you know what forms you need, how to fill them out, and when they must be submitted by, filing your organization’s taxes can be a simple check on your to-do list.

To help your team better understand its tax forms, this guide will explore a few essential documents all nonprofit professionals should know. 

Form 990

All U.S.-based nonprofits must file a tax return via IRS Form 990 every year. The IRS uses Form 990 to assess nonprofits’ financial honesty, evaluate adherence to laws and regulations, and ensure they are using their tax-exempt status for legitimate purposes. While the specific contents of Form 990 change over time, your form should look something like this:

In general, Form 990 asks questions about your nonprofit’s finances, mission, and organization. However, be aware that there are multiple versions of Form 990, and which one you need to file depends on your nonprofit’s gross receipts and total assets.

Jitasa’s guide to Form 990 filing breaks down the four different versions of this form:

• 990-N, also called the e-postcard, is a short eight-question survey completed online. This form is available to small nonprofits with gross receipts of less than $50,000.
• 990-EZ is also a condensed version of the standard Form 990—about four pages long when printed. To qualify for this form, nonprofits must have gross receipts of less than $200,000 and total assets valued at less than $500,000.
• 990 Full is the standard Form 990, which is 12 pages long. Large nonprofits with gross receipts of at least $200,000 or total assets valued at $500,000 or more that are not private foundations must complete this version.
• 990-PF is for private foundations, regardless of gross receipts or total assets. In addition to the basic organizational and financial information other Form 990 variations request, the 13-page 990-PF asks about private foundation-specific details such as private assets, trustees, officers, and grants.

When assessing which Form 990 variant you need to file, be sure to calculate your total assets rather than your net assets. If you’re unsure whether your assets disqualify you from the 990-N or 990-EZ—for example, if you have donations of stock and other immaterial assets that are trickier to evaluate—consult a nonprofit accountant.

If you do file the wrong Form 990 or submit your form with missing information, the IRS will get in touch with you to report the error. They’ll provide directions for how to rectify any missing or incorrect information and will also ask you to provide an explanation of why the error occurred. Providing a reasonable cause for any mistakes and responding swiftly to the IRS can help prevent penalties. 

Form W-9

Form W-9 is the IRS’s “Request for Taxpayer Identification Number and Certification” form. Essentially, it’s used to report contracting work, and nonprofits that have hired contractors or performed contract work will need to file it.

Like Form 990, Form W-9 changes from year to year. However, it will likely look something like this: 

This form provides contractors and the contracting organization with the necessary information they need to complete other tax forms, particularly Form 1099, which is used to report miscellaneous income and payments.

If your nonprofit worked with a contractor, such as a graphic designer or grant writer, your organization won’t need to complete a W-9. Instead, the contractor will complete one, and your nonprofit will file it and use the information it provided to issue the contractor a 1099 as long as all of the following circumstances apply:

• The payment recipient is not formally employed by your nonprofit.
• The payment recipient is an individual, partnership, vendor, or estate.
• The payment was made for services performed for your nonprofit.
• The total annual payment was $600 or more.

If your nonprofit routinely works with the same contractors you should be able to reuse the same W-9 from year to year, barring any updated information like a change of address. 

State-Specific Forms

Every nonprofit should research its state’s annual filing requirements for 501(c)(3) organizations. Requirements differ from state to state, with some simply accepting copies of your Form 990 and others having their own forms you’ll need to complete as well.

Let’s look at California as an example. Nonprofits based in this state must file one or more of these tax forms every year:

• Form 100: The California Franchise or Income Tax Return, which all nonprofits not controlled by the state must file if they have an annual taxable income of $100 or more
• Form 109: Exempt Organizations Business Income Tax Return, which all nonprofits not controlled by the state must file if they have annual unrelated business income of $1,000 or more
• Form 199: Exempt Organization Annual Information Return, which nonprofits with gross receipts of $50,000 or more must file. Additionally, all private foundations and nonexempt charitable trusts must file Form 199, regardless of gross receipts.
• Electronic FTB 199N: California e-Postcard, which is a truncated version of Form 199, is available to nonprofits with annual gross receipts of $50,000 or less

Because tax forms vary from state to state and filing can get complicated for nonprofits with branches in multiple states, it’s often helpful to work with professional nonprofit accountants. If your nonprofit needs tax filing assistance, seek out services that are familiar with charitable organizations and your state’s unique requirements.

Tax forms can cause stress, but as long as your nonprofit’s treasurer and financial team stay organized, you should have little trouble filing. If you’re unsure what tax forms are relevant to your nonprofit, research your state’s requirements, calculate your assets, and assess any work relationships you have that may be considered contracting. Plus, you can also always work with an external nonprofit accounting service if your needs get too complex for your in-house team to handle alone.