In the nonprofit sector, it’s common knowledge that your tax-exempt organization must file an annual return with the IRS – this form reports your organization’s total revenue, expenses, and activities. But if your exempt organization is considered foreign, then filing may be different than your domestic counterparts.
What is Considered a Foreign Charity?
A foreign charity or nonprofit is an organization created outside of the United States, or any of its territories and possessions, which claims tax-exempt status on revenue earned within the United States. A big difference between domestic and foreign charities is that US contributions to foreign organizations are not tax deductible.
Why Should a Foreign Charity Have to File?
Foreign organizations are required to file an annual 990 return if the IRS recognizes it as tax-exempt, it receives more than $50,000 in gross receipts from U.S. sources, and it engages in significant activity within the U.S. other than investment activities.
If your foreign charity makes less than $50,000 in the U.S. or doesn’t participate in important US activities, you may be relieved from filing or choose to submit an IRS Form 990-N (e-Postcard).
For those who want or are required to file, you must report values in U.S. currency along with the conversion rate your organization uses. Combine amounts that come from both outside and inside the United States and give the total for each – your information must also be submitted in English.
Which 990 Forms Should Foreign Charities File?
Based on your gross receipts from U.S. sources, you are required to file the same types of forms as domestic exempt organizations:
- IRS Form 990 – U.S. gross receipts are over $200,000
- IRS Form 990-EZ – U.S. gross receipts are between $50,000 and $200,000
- IRS Form 990-N (e-Postcard) – U.S. gross receipts are less than $50,000
Important: Like many other domestic organizations, if your foreign group is a private foundation or subject to unrelated business income tax, you’ll file IRS Form 990-PF or Form 990-T respectively.
With ExpressTaxExempt.com, complete and transmit your foreign organization’s 990 return in a secure and accurate way that is quicker than paper filing. Our cloud-based service even supports physical addresses located outside the United States. We also scan your entire form for any errors so can send a proper filing the first time around.
Feel free to contact our U.S. – based, e-file professionals at 704.839.2321, Monday through Friday from 9 a.m. to 6 p.m. EST, with any questions or help with your 990 tax return. We also offer 24/7 email support with support@ExpressTaxExempt.com.