Nonprofit and tax-exempt organizations are expected to file annual returns with the IRS, such as IRS Form 990, the Return of Organizations Exempt From Income Tax. There are several different 990 forms your organization could be eligible to file based on its gross receipts. In general, most small to mid-sized nonprofit organizations can be expected to file either Form 990-N or 990-EZ.
Form 990-N vs. 990-EZ
Part of the stress that comes with tax forms isn’t just about filling them out but also figuring out which form your organization needs to complete. Form 990-N and 990-EZ have several similarities, but it’s crucial your organization differentiates between which one they are eligible to file.
The IRS states, “Most organizations exempt from income tax under section 501(a) must file an annual information return (Form 990 or 990-EZ) or submit an annual electronic notice (Form 990-N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required to File Form 990 or Form 990-EZ), depending upon the organization’s gross receipts and total assets.”
But, we know IRS language can be a bit confusing, so here’s an in-depth look at Form 990-N vs. 990-EZ to help your organization decipher which form they need to file:
What is it?
Small Nonprofits and tax-exempt organizations with gross receipts of 50,000 or less must file Form 990-N, the Electronic Notice (e-Postcard) for annual reporting. However, even if your organization is eligible to file Form 990-N, you can choose to submit Form 990 or 990-EZ instead. It is important to note that if you choose to file an annual information return (Form 990 or Form 990-EZ) instead of the e-Postcard, you must file a complete return. An incomplete or partially completed Form 990 or Form 990-EZ will not satisfy the annual filing requirement.
Form 990-N is a short return and requires minimal information to complete. To complete Form 990-N, you will need to provide eight items of information about your organization.
Confirmation that the organization’s annual gross receipts are $50,000 or less
If applicable, a statement that the organization has terminated or is terminating (going out of business)
There are no additional schedules you need to attach with Form 990-N.
Where and When to File
There is no paper version of Form 990-N; thus, it must be filed electronically. Form 990-N is due every year by the 15th day of the 5th month after the close of your tax year. Therefore, you cannot file the e-Postcard until after your tax year ends.
If you do not file your e-Postcard on time, the IRS may send you a reminder notice, but you will not receive a penalty for late filing the e-Postcard. However, an organization that fails to file required e-Postcards (or information returns – Forms 990 or 990-EZ) for three consecutive years will automatically lose its tax-exempt status. The Form 990-N due date cannot be extended.
What is it?
Form 990-EZ is the short form of the annual information return for exempt organizations or Form 990. Organizations exempt from income tax under section 501(a) must file an annual information return (Form 990 or 990-EZ or Form 990-N, (e-Postcard)), depending upon the organization’s gross receipts and total assets. For example, if an organization has gross receipts between more than $50,000 and $200,000 and total assets at the end of the year less than $500,000, it can file Form 990-EZ instead of Form 990.
As for Form 990-EZ, the information you will need to complete your form is a bit more extensive than Form 990-N. For Form 990-EZ, you will need to provide the same eight items listed above with Form 990-N and five additional items.
Revenue, expenses, and changes in net assets or fund balances
Statement of program service accomplishments
List of officers, directors, trustees, and key employees
Itemization of grants received, if applicable
There are 8 Schedules in total available for Form 990-EZ that may need to be attached to the tax return based on particular organizational activities. These Schedules include Schedule A, B, C, E, G, L, N, and O.
Where and When to File
Previously, organizations had the option to either paper file their returns or submit them electronically. However, the Taxpayer First Act of 2019 states that Form 990-EZ, for the tax years ending after July 31, 2021, must be e-filed going forward. Therefore, E-File Form 990-EZ by the 15th day of the 5th month after the organization’s accounting period ends (May 15 for a calendar-year filer).
Under section 6652(c)(1)(A), a penalty of $20 a day, not to exceed the lesser of $10,500 or 5% of the gross receipts of the organization for the year, can be charged when a return is filed late. Also, If the organization doesn’t file a complete return or doesn’t furnish correct information, the IRS will send the organization a letter that includes a fixed time to fulfill these requirements. After that period ends, the person failing to comply will be charged a penalty of $10 a day with a maximum penalty of $5,000. If your organization needs more time to submit their return, they can file Form 8868 to receive a 6-month deadline extension. You must apply for this extension on or before your Form 990-EZ deadline.
Submit Your 990 Returns With Ease
Submitting your tax returns is never something people look forward to; however, it is necessary. Using an IRS-authorized e-filing provider can help to ease the workload of filing your tax returns drastically.
ExpressTaxExempt is an IRS-authorized e-filing service that thousands of exempt organizations use to file their Nonprofit tax return. ExpressTaxExempt is a reliable source your tax-exempt organization can use to ensure an accurate, secure, and quick filing of your annual returns. ExpressTaxExempt supports Form 990, 990-N, 990-EZ, 990-PF, 990-T, and extension Form 8868. You can also attach the applicable Schedules on your return for FREE!
Along with our quick and easy e-filing, ExpressTaxExempt also provides internal error checks, unlimited filing, expert assistance from our support team, and the ability to re-transmit rejected returns for free. Account managers can also invite users to approve and review their returns before submitting them to the IRS.
With ExpressTaxExempt, submitting your annual returns is stress-free and keeping your organization IRS compliant is simple!