What Ministries Should Know About IRS Form 990

By Raul Rivera

As a ministry leader, it is essential to understand the significance of annually filing IRS Form 990 for tax-exempt organizations. This form helps the IRS determine whether nonprofits are:

• Continually meeting financial support requirements
• Not operating for the private benefit of individuals within the organization
• Remaining organized for charitable purposes that allow them to maintain their tax-exempt status

Here are some things you should know about IRS Form 990:

Are Pastors supposed to file Form 990 for the church? 

Churches typically do NOT have to file 990 tax returns. Section 6033(a)(3)(A)(i) exempts churches, their integrated auxiliaries, and conventions of churches from filing Form 990 unless they provide health insurance to their employees. If that is the case, Form 990-T may need to be completed.

However, all other 501(c)(3) organizations and other tax-exempt entities must file whether they are religious or not. Private foundations must always file Form 990, no matter how much they receive in donations.

What information is included in Form 990?

Form 990 is a comprehensive tax return that requires organizations to disclose information about their mission, programs, governance, and finances. The form includes questions about the organization's revenue and expenses, assets and liabilities, and key officers and directors.

Which Form 990 must you file?

There are several variations of Form 990 annual informational return:

• 990-N (the e-Postcard): A 990-N is an electronic notice. Organizations with usually $50,000 or less gross receipts will file this electronic notice.
• Form 990-EZ: Form 990-EZ is also referred to as the short form. Organizations with gross receipts usually more than $50,000 but less than $200,000 and assets valued at less than $500,000 are required to file this form.
• Form 990: Form 990 is also known as the long form. On average, organizations with gross receipts are $200,000 or greater and assets valued at $500,000 or greater are required to file Form 990.
• Form 990-PF: All private foundations are required to file Form 990-PF.
• Form 990-T: All nonprofits, including churches, must file a 990-T if they have unrelated business income, which is income from conducting an activity unrelated to their tax-exempt purpose. This also applies to churches that provide health insurance to their employees and qualify for the small business healthcare tax credit. Most churches providing health insurance for their employees will most likely qualify for this tax credit. They can receive up to a 50% refund on all health insurance premiums that they pay.

What is the deadline?

All 990 filers must submit their returns by the 15th day of the 5th month after the close of their fiscal year. For instance, if your fiscal year coincides with the calendar year ending on December 31st, you must file Form 990 by May 15th of the following year.However, if your fiscal year ends on June 30th, you must file Form 990 by November 15th of the same year.

Why is Form 990 crucial?

It provides the IRS and the public with information about the organization's finances and operations to help ensure that tax-exempt organizations are fulfilling their charitable mission and not engaging in activities that could jeopardize their tax-exempt status. Failure to file Form 990 can result in penalties and could ultimately revoke an organization's 501(c)(3) tax-exempt status.

What are some tips for filing Form 990?

Filing Form 990 can be a daunting task, but there are several things you can do to make the process easier:

• Make sure you understand the form and its requirements 
• Maintain accurate financial records 
• Ensure that all transactions are appropriately accounted for and categorized
• Consider hiring a tax professional who has experience working with tax-exempt organizations.

At StartCHURCH, we can ensure that you are filing the correct Form 990 for your organization on time to ensure the success and sustainability of your ministry. For more information, please give our office a call today at (844) 857-6023 or schedule a call with a specialist below.

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