IRSForm 990 is a public record of all the numbers that protect your organization’s health. It shows the community how you use their donations to support your employees, keep your lights on, and care for the world during this difficult time.
Since Form 990 is so important for your organization’s wellbeing, avoiding errors is crucial.
Small Form 990 Mistakes Can Cause Big Problems
It can be easy to make mistakes on Form 990, but those errors can result in fines, fees, penalties, and serious damage to your organization’s reputation.
Form 990 is an essential part of maintaining tax-exempt status and a great way to stay in good standing with the IRS. It’s also accessible online, which makes it your organization’s financial front.
In some cases, errors on Form 990 can even endanger your tax-exempt status. Click here to learn more about IRS penalties.
Here are the most common mistakes on Form 990 and how you can avoid them.
Missing the IRS Form 990 Deadline
This year, due to COVID-19, your Form 990 deadline has been extended to July 15, 2020. That is just a few days away! Meeting your Form 990 deadline helps you avoid expensive fees and is one of the most important ways to protect your tax-exempt status. Late filing fees are $20 a day and can accumulate to up to $50,000.
Even if you took the time to submit Form 990 to the IRS before July 15, making errors can result in your organization being recorded and penalized as if you had completely missed the deadline.
EIN and Identification Errors
The IRS recognizes your organization by its Employer Identification Number (EIN), so it is really important to list it correctly. It can be surprisingly easy to misidentify your organization if there are differences between your nonprofit’s working title and legal name. Make sure you know about any differences and are able to report your name and EIN accurately on Form 990.
If you make typos or report incorrect information in this field, the IRS will either reject your return or simply not be able to connect it to your organization.
Missing information is another common problem that can cause your Form 990 to be rejected. Just like with incorrect information, filing an incomplete return is the same thing as not filing at all to the IRS. Make sure to complete all your data-entry fields and include all the required schedules.
If you’re not sure about which IRS Form 990 your organization is required to file, click here and we’ll find it for free.
When you’re trying to consider all of your organization’s financial records at once, it can be easy to mix up or mistype a number here and there. If numbers do not match up across your schedules, or financial components are not adding up to your net assets, your form can be rejected. These types of mistakes can also raise red flags that prompt the IRS to audit your organization.
How to Avoid IRS Form 990 Mistakes and Penalties
The possibility of making an error on Form 990 can be overwhelming, but there is an easy solution. Filing with an IRS certified e-file provider dramatically cuts down your risk of mistakes.
Get ahead of the July 15 deadline and stop last-minute mistakes before they happen with ExpressTaxExempt’s software. If your organization is struggling to choose an e-file provider, visit this blog to find out what to look out for.
A helpful feature of e-filing with ExpressTaxExempt is that data-entry fields come with prompts to help you provide the right answers on every line of Form 990. If you run into a question, we offer 100% U.S. based customer support. Our team specializes in the tax-exempt filing process and is always happy to help.
To make errors even less likely, our software reviews all your information, checking for discrepancies, typos, and missing information before submitting your tax return to the IRS.
If for some reason your return is rejected, we will always resubmit it for free. Your organization has had to make so many adjustments to protect your community during COVID-19, so we’re here to make tax-exempt filing simple and reliable.