IRS 990-EZ Explained
What is IRS 990-EZ?
The IRS 990-EZ form is a tax document used by some organizations to report their annual financial activities to the Internal Revenue Service (IRS). It's specifically designed for smaller tax-exempt organizations that may not have the same financial complexities as larger entities. In essence, it acts as a simplified version of the standard IRS Form 990, allowing eligible nonprofits, charities, and other tax-exempt groups to provide essential financial information without the burdensome details required by the larger forms.
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Purpose of IRS 990-EZ
The primary purpose of IRS 990-EZ is to ensure transparency in the financial operations of tax-exempt organizations. It helps maintain compliance with federal regulations by requiring these organizations to report their income, expenses, and activities. The form plays a crucial role in informing the IRS about how an organization operates, ensuring that it adheres to its tax-exempt status. Additionally, it provides vital information to donors and the public, fostering trust and accountability in the nonprofit sector.
Where is IRS 990-EZ used and by whom?
IRS 990-EZ is primarily used by small to mid-sized tax-exempt organizations, including:
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1.Charitable organizations: Many nonprofits rely on donations and grants to fund their activities and need to report their financial information.
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2.Religious organizations: Some churches and religious entities may qualify to file this form to meet IRS reporting requirements.
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3.Social clubs: Organizations with specific group interests, like hobby clubs, often operate under tax-exempt status.
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4.Educational institutions: Smaller private schools and educational nonprofits may also utilize this form.
These organizations typically have gross receipts of less than $200,000 and total assets under $500,000, making them eligible to file this streamlined form rather than the more complex typical Form 990.
Step-by-step: how to fill out IRS 990-EZ
Completing IRS 990-EZ involves several straightforward steps. Here’s how to tackle the form section by section:
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1.Part I: Basic Information
- Provide the organization's name, address, and EIN (Employer Identification Number).
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2.Part II: Revenue
- List all sources of income, including contributions, grants, program services, and investments.
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3.Part III: Expenses
- Document all expenditures, which may include salaries, office supplies, rent, and other costs related to operations.
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4.Part IV: Net Assets
- Provide data on the organization's net assets or fund balances.
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5.Part V: Required disclosures
- Include additional information as necessary, particularly regarding any issues that might affect tax-exempt status.
You can fill out the IRS 990-EZ easily online using platforms like pdfFiller, which allows users to edit, e-sign, and manage documents efficiently.
Who is required to complete IRS 990-EZ?
Organizations that must file IRS 990-EZ generally include:
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1.Tax-exempt organizations whose gross receipts are below $200,000 for the year.
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2.Entities with total assets under $500,000 at the end of the year.
If an organization does not meet these criteria, it may need to file the standard Form 990 or another appropriate form. This filing requirement exists to ensure that all tax-exempt entities maintain their status through transparency and accountability.
Information you need to complete IRS 990-EZ
Before filling out the IRS 990-EZ, gather the following information:
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1.Employer Identification Number (EIN)
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2.Organization's name and address
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3.Gross receipts for the year
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4.Total expenses for the year
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5.Net assets or fund balance at the end of the year
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6.Details of program service revenues
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7.A breakdown of significant expenses, including salaries and contractual services
Having this information ready will make the filing process smoother and more efficient.
How to submit IRS 990-EZ
Submitting IRS 990-EZ can be done through various channels:
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1.Online submission: Organizations can file electronically using the IRS’s e-file system, which is often the quickest method.
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2.Mail: Paper forms can be mailed to the address provided by the IRS for submissions, depending on the organization’s location.
Make sure to submit the form by the due date, typically the 15th day of the 5th month after the end of the organization’s fiscal year. For example, if your organization's fiscal year ends on December 31, your deadline would be May 15.
When to update or refile IRS 990-EZ
There are several scenarios in which an organization may need to update or refile IRS 990-EZ:
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1.Changes to the organization's address.
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2.Modifications in the structure or governance of the organization.
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3.Adjustments in gross receipts or total assets that alter the filing status.
Updating or refiling is essential to maintain compliance with IRS requirements and keep the organization’s tax-exempt status intact.
What happens if you don’t file IRS 990-EZ?
Failing to file IRS 990-EZ can have significant consequences. Here are a few potential outcomes:
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1.Penalties: Organizations may face financial penalties, which can accumulate if the form remains unfiled.
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2.Loss of tax-exempt status: Continuous failure to file can lead to automatic revocation of tax-exempt status, making future operations subject to taxation.
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3.Negative impact on funding: Donors and grantmakers often require up-to-date financial disclosures before contributing.
It's crucial for organizations to file this form on time to prevent these issues and maintain financial health.
Fill out IRS 990-EZ online
Get the latest version of the form and complete it in minutes.
Frequently Asked Questions About the IRS 990-EZ
What is the IRS 990-EZ form and who needs to file it?
The IRS 990-EZ form is a shorter version of the IRS Form 990, designed specifically for small tax-exempt organizations that have gross receipts under a certain threshold. Generally, organizations with gross receipts between $50,000 and $200,000 can file the IRS 990-EZ. This form simplifies the filing process, making it more accessible for smaller nonprofits while ensuring compliance with IRS regulations.
What are the filing requirements for the IRS 990-EZ?
To file the IRS 990-EZ, organizations must have their annual gross receipts between $50,000 and $200,000 and total assets below $500,000 at the end of the year. It's important for tax-exempt entities to check their qualifications before filing to avoid penalties for late or incorrect submissions. Understanding these criteria ensures that your organization remains compliant with IRS regulations and maintains its tax-exempt status.
How do I fill out the IRS 990-EZ form?
Filling out the IRS 990-EZ form requires gathering financial records, including income statements, expenses, and asset values. Organizations must provide details regarding their mission, activities, and governance structure. It is crucial to complete each section accurately to avoid potential audit risks or penalties related to the IRS 990-EZ.
What is included in the IRS 990-EZ form?
The IRS 990-EZ form includes essential information such as revenue, expenses, net assets, function and program accomplishments, and governance details. It also requires a list of board members and key personnel involved in the organization. Including accurate and complete information is critical to complying with IRS requirements and ensuring transparency with stakeholders.
When is the deadline to file the IRS 990-EZ?
The deadline to file the IRS 990-EZ is typically the 15th day of the 5th month after the end of your organization’s accounting year. For organizations operating on a calendar year, this means the deadline falls on May 15. Failing to meet the IRS 990-EZ deadline can result in penalties and possibly jeopardizing the entity's tax-exempt status.
Can the IRS 990-EZ be filed electronically?
Yes, the IRS 990-EZ can be filed electronically through the IRS e-Postcard system or other authorized e-filing providers. Electronic filing simplifies submission and helps to ensure compliance, as the systems often highlight missing information. Using electronic filing can also result in quicker processing times, allowing organizations to focus on their missions rather than paperwork.
What happens if I don’t file the IRS 990-EZ?
Not filing the IRS 990-EZ can lead to serious consequences, including penalties ranging from $20 to $100 per day, depending on the size and duration of the delay. Failure to file for three consecutive years results in automatic revocation of tax-exempt status, which can have significant implications for your organization. It is vital to prioritize timely filing to maintain compliance with IRS regulations.
How to correct an error on the IRS 990-EZ form?
If you discover an error on a previously filed IRS 990-EZ form, you should file an amended return using Form 990 or Form 990-EZ. Clearly indicate that it is an amended return and explain the corrections made. Correcting mistakes provides transparency and maintains compliance, safeguarding your organization’s tax-exempt status.
Where can I find instructions for completing the IRS 990-EZ?
Detailed instructions for completing the IRS 990-EZ can be found on the official IRS website. These guidelines provide insights into each line item of the form and common issues organizations may face. Referring to these instructions ensures proper completion and adherence to IRS requirements, which is critical for maintaining tax-exempt status.
Is there a difference between IRS 990-EZ and IRS Form 990?
Yes, the primary difference between IRS 990-EZ and IRS Form 990 lies in the organization’s size and revenue thresholds. IRS 990-EZ is intended for smaller tax-exempt organizations, while Form 990 is required for larger organizations with gross receipts exceeding $200,000. Understanding the distinctions allows organizations to select the correct form that aligns with their financial standings and IRS regulations.
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