The following is a guest post from File990, a software provider specialized in helping nonprofits track, complete, and e-file their annual Form 990 to maintain tax exemption.
So far, 2020 is shaping up to be quite an unpredictable year. The COVID-19 crisis has significantly impacted individuals, businesses, and organizations around the world in unimaginable ways. As a nonprofit professional, you’re likely aware of the various ways the pandemic has turned nonprofit strategies for both fundraising and programming upside down. Maybe your organization is struggling to pursue your mission in a turbulent time.
One aspect you might not be so familiar with, however, is the way that the coronavirus has shifted nonprofit tax regulations for the year. As you know, nonprofit organizations are required to file an annual IRS Form 990 to maintain tax-exempt status and stay compliant.
While filing your taxes is likely not at top of mind in the midst of a global pandemic, it’s important that you don’t let it fall through the cracks. Otherwise, you risk facing the negative consequences of a late or missing tax form— including substantial fines and, eventually, a loss of tax exemption.
As we walk through an unusual tax season, it’s likely that you’ll have some pressing questions concerning deadlines, updates, and top tips. That’s why we’ve put together this quick guide here at File990 to help as you adjust to these new practices. You might be asking yourself the following:
We’ll answer these questions and more to better prepare you for filing your nonprofit taxes even amid a crisis. Ready to get started? Let’s jump in.
As new tax codes are released, it’s important to keep updated, lest you risk missing out on important information. Even before the coronavirus outbreak, substantial changes were made requiring every organization to begin e-filing their annual nonprofit taxes— as opposed to a traditional mail-in version.
Now, it’s more important than ever to keep up with IRS updates in response to COVID-19. While staying up to date with the latest coronavirus updates and resources can be difficult, especially when there seems to be new information released every day, it’s essential for maintaining a healthy organization.
Here are the two biggest things to know regarding coronavirus updates and nonprofit taxes:
Due to the turbulence caused by the global pandemic, the IRS is giving nonprofits like yours a little extra wiggle room to get their tax forms completed without penalty. Many nonprofits are struggling to keep their doors open during this time, and the automatic extension can be a great way of relieving some of that stress. However, it’s important that you don’t put off filing for too long or neglect filing altogether!
Now that you have a better understanding of the updated deadlines and what that means for your organization, it’s time to walk through the basics of the Form 990 process.
Tax forms can seem quite intimidating. For nonprofit organizations and the professionals within, filing your Form 990 might be a daunting task— especially if you’re new to the sector. That’s why many nonprofits turn to accounting professionals for assistance. However, according to File990, many organizations can get by quite easily even without the help of an accountant to file their tax forms.
The first step in filing your nonprofit taxes is to determine which form is required of you. While most nonprofit organizations will file some version of Tax Form 990, there are a few different types to choose from. Here are the four main forms and the distinctions between them:
Then, based on which form your organization is eligible for based on your gross annual receipts (or type of organization), you’ll follow the step-by-step instructions provided by the IRS. If you’re still concerned about filing your taxes accurately and on time, investing in nonprofit software might be the best way to go.
For further research, take a look at this guide to Form 990 software from re:Charity to find the best solutions for your organization. Plus you can check out some of our top tips for filing your nonprofit taxes here!
In recent years, many organizations have made the switch to e-filing their nonprofit taxes for one reason or another. While traditional tax forms have been completed by hand and sent via direct mail, new technology allows organizations of all sizes to file digitally.
If you’ve yet to make the jump, we highly recommend you do that this year. After all, electronically filing your nonprofit taxes provides the following benefits (and more):
Whether you’ve been e-filing for years or this is your first time, these benefits are important to keep in mind as you walk through the nonprofit tax process. Understanding the reasoning behind the task can make it seem less like a chore and more like a useful contribution to the organization.
When you have the right resources, e-filing your nonprofit taxes can be a breeze— even in the midst of a pandemic. All you need to do is stay up-to-date with the latest tax regulations, explore the best software solutions, and employ guides like this one to walk you through the process. Good luck!