Nonprofits and Uncle Sam

There is no shortage of nonprofit associations on the North Fork, from groups that support businesses to historical societies to land preservation and animal welfare groups. Regardless of the cause you support, all nonprofits are required to file an annual tax return. Uncle Sam wants to see what you're up to in spite of the fact that nonprofits are not subject to income taxes. This year tax returns are due on Monday. If you can't file by then the IRS will grant you a three-month extension as long as you file the extension request on or before Monday.

Now, some of the rules regarding nonprofit returns have changed over the past few years as follows:

If the nonprofit has gross revenues (on average) of less than $50k per year (this was previously $25k per year), you only have to file a 990-N which is merely an online postcard verifying less than $50k in revenues. This process takes about two minutes and does not require an accountant or any tax software. 

If the nonprofit earns more than $50k but less than $200k (and has assets of less than $500k), you can file Form 990-EZ. This form is much shorter than the full Form 990, but will require either an accountant or tax software to prepare the return.

If the nonprofit earns more than $200k, Form 990 is required. I highly recommend that you have a CPA prepare this form as it is more complex and the experience of a good CPA will save you both time and a big headache. 

Last, but not least, if the nonprofit earns revenues from business not directly related to their charter, form 990-T is required. One of my clients, a volunteer fire department, provides a good example of the requirement for the 990-T. Because they were receiving monies from a cellular company to rent the use of their tower they were required to file this form.

Don't risk losing your nonprofit status. File your nonprofit tax return or extension on time, and if necessary, hire an experienced CPA to assist you.