Nonprofit Tax and Compliance FAQ

Most tax-exempt organizations file a yearly information return: Form 990-N (e-postcard) if gross receipts are normally $50,000 or less, Form 990-EZ, Form 990, or Form 990-PF for private foundations. Churches and certain other organizations are excused from the Form 990.

Form 990-N: gross receipts normally $50,000 or less. Form 990-EZ: gross receipts under $200,000 and total assets under $500,000. Form 990: gross receipts of $200,000 or more, or total assets of $500,000 or more. Private foundations file Form 990-PF. Use the self-check on this site.

On the 15th day of the 5th month after the end of the fiscal year: May 15 for a calendar-year organization. If the date is a weekend or legal holiday, it moves to the next business day.

Yes. Form 8868, filed before the original due date, gives an automatic six-month extension. There is one six-month extension per tax year.

The 2025 Form 990 instructions say that if you are filing a 2025 Form 990, you are required to e-file. The Form 990-N is also filed electronically.

For the 2025 Form 990 the instructions list $25 a day, up to the lesser of $13,000 or 5% of gross receipts. For organizations with gross receipts over $1,309,500, it is $130 a day, up to $65,000. Reasonable cause can support an abatement request.

An organization that does not file its required annual return or e-postcard for three consecutive years automatically loses its federal tax exemption. File every year, even late, and get help if years are missing.

Churches, conventions or associations of churches and integrated auxiliaries of churches are not required to file Form 990 or 990-EZ. They may still have payroll, state and other filing duties.

Form the organization under state law, get an EIN, then apply: Form 1023 or 1023-EZ for 501(c)(3), Form 1024-A for 501(c)(4) (plus the Form 8976 notice), Form 1024 for most other categories. Applications are filed electronically on Pay.gov.

A 501(c)(3) that files its application within 27 months after the end of the month it was legally formed is generally recognized as exempt back to its formation date. If it files later, exemption generally starts on the filing date.

No. Federal recognition does not by itself give state sales tax or property tax exemptions or satisfy charitable registration. Those are separate state requirements.

Income from a trade or business that is regularly carried on and not substantially related to the organization's exempt purpose, such as some sponsorships, rentals and merchandise sales. It can be taxed and reported on Form 990-T.

When the organization has $1,000 or more of gross income from an unrelated business. It is due on the 15th day of the 5th month after the tax year ends for most organizations, and it is filed electronically.

For any single gift of $250 or more, the donor needs a written acknowledgment from the charity to claim the deduction. It must say whether the charity gave goods or services in return and, if so, describe them and give a good-faith estimate of their value.

When a donor pays more than $75 and receives goods or services, the charity must give a written statement that the deductible amount is limited to the part above the value of what the donor received, with a good-faith estimate of that value. The penalty is $10 per contribution, up to $5,000 per event or mailing, unless there is reasonable cause.

Beginning with tax year 2026, taxpayers who do not itemize can deduct up to $1,000 ($2,000 on a joint return) of cash gifts to qualifying charities. Gifts to donor-advised funds and supporting organizations do not qualify.

A 501(c)(3) is a charitable, religious, educational or similar organization; donations are generally deductible by the donor. A 501(c)(4) is a social welfare organization; donations are generally not deductible as charitable contributions. The application forms and some rules differ.

A 501(c)(3) that is not a public charity. A private foundation files Form 990-PF every year regardless of size and is subject to extra rules.

Charities that solicit in Illinois or hold charitable assets generally register with the Attorney General and file an annual report (Form AG990-IL) within six months after the fiscal year ends. Illinois not-for-profit corporations also file an annual report with the Secretary of State.

For charities that raise funds only with their own staff and volunteers: an audit with the annual report if contributions exceed $500,000, and reviewed financial statements if they are over $300,000 but not over $500,000 (effective January 1, 2024). The audit threshold is $25,000 for charities that use a paid professional fundraiser.

Nonprofit financial statements classify net assets as with donor restrictions (a gift for a purpose or period the donor set) and without donor restrictions. The books must track restrictions until they are met.

Yes. The Form 990 is a public document, so the descriptions of programs, governance and compensation can be read by donors, funders and the press. Schedule B (contributors) has special handling.

Yes. The firm behind this site works with clients nationwide and remotely.

Some small organizations do. The risk is in the details: the right form, the functional expense allocation, governance answers and the schedules. Many organizations hire a CPA for the annual return and keep a volunteer treasurer for monthly oversight.

Gather bank and credit card statements, the determination letter, articles and bylaws, board minutes and prior returns. We can rebuild the books and tell you which years are open and which filings are missing.