What Exempt Organizations Need to Know About Form 990-T

Although tax-exempt organizations do not have to pay income taxes, they are still required to pay tax on Unrelated Business Taxable Income (UBTI). With that comes filing annual information returns to the IRS such as Form 990-T. 

If your organization needs to file Form 990-T, ExpressTaxExempt is here to help! As of recent, ExpressTaxExempt will now be supporting e-filing for Form 990-T. E-filing for 990-T with ExpressTaxExempt is simple and you gain peace of mind knowing your returns will be IRS-compliant. 

Here is an overview of everything your organization should know about Form 990-T: 

What is Form 990-T?

Form 990-T, Exempt Organization Business Income Tax Return (and Proxy Tax Under Section 6033(e)), is used to report unrelated business income and tax liabilities.

Unrelated Business Taxable Income or (UBTI), is income generated from a trade or business that is regularly maintained; however, the income does not substantially relate to the charitable, educational, or other purpose that is the basis of the organization’s exemption.

As outlined by the IRS, Form 990-T can also be used  for several other purposes including:

• To claim a refund on an income tax paid by a regulated investment company (RIC) or a real estate investment trust (REIT) on an undistributed long-term capital gain
• To report proxy tax liability
• To request credits for certain federal excise taxes paid or for small employer health insurance premiums paid 
• To report unrelated business income on reinsurance entities

Who Needs to File Form 990-T?

Exempt organizations that file Form 990, 990-EZ, or 990-PF and have $1,000 or more of gross income from an unrelated business must file Form 990-T. 

When an organization files their annual information return, Form 990, 990-EZ, or 990-PF, they must file a separate IRS Form 990-T. 

When is the Deadline to File Form 990-T?

For most exempt organizations, Form 990-T is due annually by the 15th day of the 5th month after the end of their tax year.

There is a separate deadline for the following organizations:

Employees’ trusts, defined in section 401(a), IRAs (including SEPs and SIMPLEs), Roth IRAs, Coverdell ESAs, or 408(a) (Archer MSAs) must file Form 990-T by the 15th day of the 4th month after the end of their tax year.

It is important to note that if a due date falls on a Saturday, Sunday, or legal holiday, the due date will be moved to the next business day. 

E-Filing Mandate for Form 990-T

Under the Taxpayer First Act, an important change was recently made in regards to filing Form 990-T with the IRS. Effective in 2021, all organizations with a due date on or after April 15, 2021, must file Form 990-T for 2020 electronically. Thus, paper filing Form 990-T is no longer an option. 

With the IRS mandating e-filing for Form 990-T, your organization could benefit from using an online e-filing service to file your returns. ExpressTaxExempt is a trusted e-filing service, used by thousands of non-profit organizations, that will ensure your Form 990-T is filed properly and on time. 

Form 990-T Schedule A 

In September, the IRS released a considerable redesign of Form 990-T for the 2020 tax year, including the e-filing mandate, mentioned previously. Among these changes, the most prominent is the addition of Schedule A. Schedule A will be used to consolidate all taxable activity in a centralized location within your 990-T return. 

Click here, to learn more about the Form 990-T redesign for 2020.

In the updated form, reporting will be divided into two distinct sections. These sections include the base Form 990-T and the new Schedule A. The new Schedule A (Form 990-T) replaces the previous Schedule M and is meant to be prepared for each separate unrelated business activity. Meaning, each unrelated trade or business of an organization has a separate “Schedule A” attached to the return, with a list of how many Schedules A are attached. 

When you e-file 990-T with ExpressTaxExempt, you can attach Schedule A for free. Our internal audit check feature will review your Form for any errors, and ensure an error-free return. 

ExpressTaxExempt 

ExpressTaxExempt supports e-filing of Form 990-T and is a trusted e-filing service that will help you e-file Form 990-T with ease. 

When filing, clients will receive access to internal error checks, instant notifications on their return’s status, and dedicated live customer support. 

With ExpressTaxExempt you can ensure a safe, secure, and accurate e-filing experience.