ExpressTaxExempt Blog

Form 990-EZ: Schedules A, B, and C

When it comes to the 990-EZ, there is a lot going on. At first glance, learning about this form might seem like an impossible task, but it doesn't have to be. Why don't we break it down a bit so we can take a closer look at every section. Let's begin our journey into the wonderful world of the 990-EZ by taking a look at Schedules A, B and C.

Schedule A

Every 501(c)(3) organization will fill out a Schedule A. It tells more about what type of organization you are; if your organization is classified as a government, education, community organization, or grassroots.  In addition, this form identifies your public support, where you get your support, and in what form your support comes in (grants and/or gifts).

For more information on Public Support Tests, checkout our blog - What Does It Mean: Failure To Meet A Public Support Test

Schedule B

Schedule B is based off your contributors.  The general rule for nonprofits, is that when your organization receives more than $5,000 from any one contribution, it will be reported on this form. For exclusively religious contributions, it is a bit different. If your organization recieves a contribution from an exclusively religious contributor of $1,000 or more, it will be reported on this form. With this schedule there is a Special Rule that could have an effect on how you will file this particular schedule.

The Special Rule:
For an organization described in section 501(c)(3) organizations that meets the 33 and 1/3% support test of the regulations under sections 509(a)(1) and 170(b)(1)(A)(vi) and not just the 10% support test (whether or not the organization is otherwise described in section 170(b)(1)(A)), list in Part I only those contributors whose contribution of $5,000 or more during the tax year is geater than 2% of the amount reported on Form 990-EZ, Line 1.

Schedule C

Finally, the Schedule C is for organizations that are politically active.  This schedule requires you to provide information on your political and lobbying activities. Lobbying activities, as defined by the IRS, would be classified as..

An attempt to influence legislation by propaganda or otherwise, presentation of testimony at public hearings held by legislative committees, correspondence and conferences with legislators and their staffs, communications by electronic means, and publication of documents advocationg specific legislative action.

These are only the first 3 990-EZ Schedules. Next time we will go over Scedules E, G, L, and O. If you want more information right this second, head on over to the Express990.com website where we go into great detail about the 990-EZ form and every schedule we provide. 

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End of Year Tax Tips For Nonprofit Organizations

I had the chance to sit down with the Express990 crew to discus what is most important to be aware of at the end of the year. Now, they had a lot of tips, but a few really stood out. So to kick of this important series, End of Year Tax Tips, we start with Yearly renawal of state articles of Incorporation. 

Yearly renew of state Articles of Incorporation.

All nonprofits must renew their articles of incorporation with their respective state(s) each year. If you only solicit charitable contributions locally, then you are only required to register your non-profit in that one state. If you intend to solicit charitable contributions nationally, you will have to register in 39 states and the District of Columbia before you can solicit within their jurisdiction.

Another Express990 crew member was on the phone with a Nonprofit Organization (NPO) and was asked a question about intellectual property. Now i'm not one to eavesdrop, but this question seemed really important. So I listened in on  the answer, and it was just perfect. Here is exactly what was said...

​Can a NPO generate money through intellectual property?

Consider intellectual property as public radio, public, television, or even the National Geographic Society, they are organizations that sell or lease their intellectual property to make a profit. This same method can use used with art groups, educational organizations, and other organizations that develop their own intellectual property for sale to others.

​If the sale of that intellectual property furthers the charitable exempt purpose of the organization, then the sales do not generate unrelated business income; regardless of the amount. However, if the material sold is unrelated to the charitable organization exempt status, this would generate unrelated taxable business income.

And too much "unrelated" business income can cost an organization its exempt status.

So even though this is an extremely busy time for nonprofit organizations, keep in mind the tips and reminders for the end of the year. You don't want to be late, or risk losing your tax exempt status. And don't forget to file your 990. If you miss filing your 990 for three consecutive years, you will automatically lose your tax exempt status. Express 990 supports e-filing of the 990-N (e-postcard) and the 990-EZ. We even have an app the file the 990-N so you can get that baby to the IRS no matter where you are. If you have any questions about filing Form 990, don't hesitate to give us a call at 704-839-2321 or send us an email: support@expresstaxexempt.com 

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Things To Know: Gift Acceptance Policy

In the perfect non-profit world all financial support would be either cash or liquid donation and free of any donor imposed restrictions. No matter the reason for the donor to give, you can count on donors to impose restrictions to test your comfort zone as an organization. 

Whether a proposed gift is in the form of cash or property, restricted or unrestricted, the having a gift acceptance policy can help you evaluate the gift and the impact that it will have on the organization. Having a gift acceptance policy will describe the nature and types of gifts that you are willing accept, with taking into consideration your organization size and the resources you have to administer the gift. Most important it will take into consideration the various risks associated with ownership of the property.

What may be a treasure in the heart of the donor may not be such a treasure in your organization's eyes or the open market, when it may have to be liquidated. That liquidation may take in inordinate amount of time and a drain on the organization resources.

This situation can create added administrative costs as well sour the relationship between you and the donor, particularly if this is not adequately planned. Thus the need to have ta Gift Acceptance Policy in place with mitigate these issues and ensure clear expectations and understanding is communicated to both parties.
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What Does It Mean: Failure To Meet A Public Support Test

Sometimes your curiosity gets the best of you and you want to know the answer to this question: What does it mean if an organization failed the "public support test"?

It's reasonable enough to ask but when you search for this answer an insane amount of information is thrown up on your screen. The Express990 team wants to save you a bit of time and some vision by just putting all your answers in this convienient, yet informative blog..

These are the answers you have been searching for...

Here is an interesting tidbit, I bet many non-profits did not know, the default rule is that all 501(c)(3) organizations are private foundations unless they qualify as a public charities. Which is mean, unless your organization passes the "public support test" you are otherwise classified and governed as a private foundation. And private foundations are subject to more restrictions and have to pay taxes on investment income. Thus qualifying as a "public" charity is very beneficial.

There are two tests that an organization can use to determine if they pass the "public support test"; donative charity test and gross receipts charity test.

The donative charity text stipulates that a charity must normally receive at least 1/3 of its total income from government grants, grants from other public charities, and from members of the public. A caveat is that there is a 2% limit on the amount of funding from any one donor, foundation, or corporate funder that can be counted toward the total.

The gross receipts charity test to see if it normally receives at least 1/3 of its total income from government, grants from other public charities, from members of the public, or from revenues generated by activities within the organization's exempt purpose. The caveat is that this test places a limit on the amount of investment income that the organization can earn. The organization cannot have not more than 1/3 of its total income can derive from investment income.

These test are review year after year. If you meet the public charity test in 2013 tax year, you will be classified a charity for the 2013 and 2014 tax years. However, if you do not pass the public support test in 2013, your organization will be classified as a private foundation for tax year 2013. If you believe that the classification of a private foundation should not be applicable to you, then you should the IRS.

Before you go to share this wealth of knowledge with the world, I just wanted to add this little smidgen (it's a word ;) of information in here for good measure. If you need to file your Form 990-N or 990-EZ and the thought of all that paperwork makes you sick to your stomach, Express990.com provides e-filing of these forms. The entire process is much more simple to get through and understand. If you have any questions, do not hesitate to contact our amazing support team
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