Filing IRS Form 990-EZ can seem like a daunting task, but for eligible tax-exempt organizations, it's a crucial annual requirement. And the good news? It's now mandatory to file it electronically! This comprehensive guide will walk you through every step of the process, ensuring you meet your obligations smoothly and efficiently.
Are You Ready to Conquer Form 990-EZ Electronically? Let's Find Out!
Before we dive into the nitty-gritty of electronic filing, let's confirm if Form 990-EZ is the right form for your organization. This is your crucial first step!
Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, is generally for tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations that meet specific financial thresholds. You are typically eligible to file Form 990-EZ if your organization's:
- Gross receipts are less than $200,000 for the tax year, AND
- Total assets are less than $500,000 at the end of the tax year.
If your gross receipts are normally $50,000 or less, you might be eligible to file the even simpler Form 990-N (e-Postcard). If your gross receipts are $200,000 or more, or your total assets are $500,000 or more, you'll likely need to file the full Form 990.
Important Note: The IRS mandated electronic filing for Form 990-EZ for tax years beginning on or after July 2, 2019 (with a slight delay for some, meaning all 990-EZs with a tax year ending July 31, 2021, and later, must be e-filed). This means no more paper filing for most organizations!
Now that you know if you're in the right place, let's get you ready for a smooth electronic filing experience!
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| How To File Irs Form 990 Ez Electronically |
Step 1: Gather Your Essential Information and Documents
Think of this as your pre-flight checklist. Having all your ducks in a row before you start the e-filing process will save you immense time and prevent headaches.
Sub-heading: Key Financial Records
- Income Statements: Details of all revenue sources, including contributions, grants, program service revenue, membership dues, investment income, and any other income.
- Expense Records: Comprehensive documentation of all expenditures, categorized appropriately (e.g., program service expenses, management and general expenses, fundraising expenses). This includes salaries, benefits, office supplies, rent, utilities, and more.
- Balance Sheet: Information on your organization's assets (cash, investments, property, equipment) and liabilities (accounts payable, loans) at the beginning and end of your tax year.
- Bank Statements: To reconcile your financial records.
Sub-heading: Organizational Details
- Employer Identification Number (EIN): Your organization's unique nine-digit tax identification number.
- Legal Name and Address: Ensure it matches IRS records.
- Primary Officer's Information: Name, title, and contact details of the responsible officer.
- Tax Year Start and End Dates: This is crucial for determining your filing deadline.
- Website Address: If your organization has one.
- Tax-Exempt Status: The specific Internal Revenue Code (IRC) section your organization is exempt under (e.g., 501(c)(3)).
- Form of Organization: Corporation, Trust, Association, or Other.
Sub-heading: Program Service Accomplishments
- Detailed Descriptions: Be prepared to clearly and concisely describe your organization's three largest program service accomplishments. Focus on what you did, who you benefited, and any quantitative metrics you can provide (e.g., number of individuals served, events held). This is your chance to showcase your impact!
Sub-heading: Governance and Key Personnel
- Board Member Information: Names and titles of all voting board members who served during the tax year, even if for a short period.
- Compensation Details: For officers, directors, trustees, key employees, and the five highest-compensated employees receiving more than $100,000. Include W-2/1099-NEC compensation, health benefits, contributions to employee benefit plans, and deferred compensation.
- Independent Contractors: Information on independent contractors who received more than $100,000.
Sub-heading: Additional Schedules (if applicable)
While Form 990-EZ is a "short form," you may still need to attach certain schedules based on your organization's activities. Common ones include:
- Schedule A (Public Charity Status and Public Support): Required for 501(c)(3) organizations.
- Schedule B (Schedule of Contributors): Reports contributions received.
- Schedule C (Political Campaign and Lobbying Activities): If your organization engaged in such activities.
- Schedule O (Supplemental Information): Highly recommended! Use this to provide narrative explanations for items on the form, clarify answers, or offer additional information. Don't underestimate the power of Schedule O to tell your organization's story and ensure clarity for the IRS and the public.
Step 2: Choose an IRS-Approved E-file Provider
Since paper filing is largely a thing of the past for Form 990-EZ, selecting a reliable e-file provider is paramount. The IRS does not provide its own software for Form 990-EZ direct e-filing; you must use a third-party vendor.
Sub-heading: How to Find an Approved Provider
- IRS Website: The IRS maintains an official list of approved e-file providers for exempt organizations. You can find this list by searching "IRS exempt organizations Modernized e-File (MeF) providers" on the IRS website. This list will show software companies that have passed the IRS's Assurance Testing System (ATS) requirements.
- Reputable Tax Software Companies: Many well-known tax software companies offer solutions for nonprofit tax filing, including Form 990-EZ. Some popular options include ExpressTaxExempt, Tax990, File 990, and others listed on the IRS website.
Sub-heading: What to Look for in an E-file Provider
- IRS Authorization: This is non-negotiable. Ensure they are explicitly listed as an IRS-authorized e-file provider for Form 990-EZ.
- User-Friendliness: Look for intuitive interfaces, step-by-step guidance, and potentially interview-style filing options.
- Error Checking/Audit Checks: The best providers will have built-in validation checks to help you catch common errors before submission, minimizing rejections.
- Security: Your organization's financial data is sensitive. Ensure the provider uses robust security measures like SSL/TLS encryption.
- Customer Support: Do they offer phone, email, or chat support in case you encounter issues?
- Pricing: Compare pricing structures. Some offer free filing for very small organizations (e.g., gross receipts under $100,000) or tiered pricing based on your organization's size.
- Schedule Support: Verify that the provider supports all the schedules your organization might need to attach.
- Prior Year Data Import: Some providers allow you to import data from previous years, saving time on repetitive entries.
- Amendment Filing: Confirm they support filing amended returns if you discover an error after submission.
- IRS Acceptance Notifications: A good provider will notify you promptly of your return's acceptance or rejection by the IRS.
Step 3: Create Your Account and Input Organization Details
Once you've chosen your e-file provider, the real work begins. This step involves setting up your account and providing the basic identification details for your organization.
Sub-heading: Setting Up Your Account
- Registration: Follow the provider's instructions to create a new account. This usually involves providing an email address and creating a secure password.
- Organization Profile: You'll typically be prompted to enter your organization's basic information:
- Legal Name
- Employer Identification Number (EIN)
- Physical Address
- Mailing Address (if different)
- Telephone Number
- Website (if applicable)
- Contact Person/Primary Officer's Details
Sub-heading: Selecting Your Tax Year and Form
- Choose Tax Year: Carefully select the tax year for which you are filing. Most providers support current and previous tax years.
- Select Form 990-EZ: Confirm you are selecting Form 990-EZ. The system may also ask if this is an initial return, a final return, an amended return, or if there's been a name or address change. Select the appropriate box.
Step 4: Populate Form 990-EZ with Your Financial and Operational Data
This is where you'll systematically enter all the information you gathered in Step 1. Most e-file providers will guide you section by section, making the process less overwhelming than looking at a blank paper form.
QuickTip: Slow down if the pace feels too fast.
Sub-heading: Part I – Revenue, Expenses, and Changes in Net Assets or Fund Balances
- Revenue: Accurately report all contributions, grants, program service revenue, membership dues, investment income, and any other income.
- Expenses: Detail your organization's expenses, categorizing them as instructed. Pay close attention to distinguishing between program service, management and general, and fundraising expenses.
- Net Assets: Calculate the excess or deficit for the year and the net assets at the end of the year.
Sub-heading: Part II – Balance Sheets
- Report your organization's assets (e.g., cash, savings, investments, land, buildings, equipment) and liabilities (e.g., accounts payable, grants payable, mortgage notes) at the beginning and end of the tax year.
Sub-heading: Part III – Statement of Program Service Accomplishments
- This is a critical section for demonstrating your organization's impact. Provide clear, concise descriptions of your three largest program service activities. Include details like the services provided, the number of people benefited, and any measurable outcomes.
Sub-heading: Part IV – List of Officers, Directors, Trustees, and Key Employees
- List all individuals who served as officers, directors, or trustees during the tax year. For officers, directors, trustees, and key employees, report their average hours per week, compensation (W-2/1099-NEC), health benefits, and other compensation.
Sub-heading: Part V – Other Information
- This section covers various compliance questions, such as whether the organization engaged in political campaign activities, lobbying activities, or had unrelated business income. Answer these questions truthfully and accurately. If you answer "Yes" to certain questions, it may trigger the need for additional schedules.
Sub-heading: Part VI – Section 501(c)(3) Organizations Only
- If your organization is a 501(c)(3), you'll need to complete this section, which often requires information related to public charity status and other specific compliance items.
Sub-heading: Attaching Required Schedules
- As you fill out the main form, the e-file software will typically prompt you if specific schedules are required based on your entries (e.g., Schedule A for 501(c)(3) organizations, Schedule B if you received significant contributions). Ensure all necessary schedules are completed and attached electronically. Don't forget Schedule O for any supplemental information!
Step 5: Review, Review, and Review Again!
This step cannot be overemphasized. A small error can lead to a rejected return or, worse, penalties.
Sub-heading: Utilize the E-file Provider's Internal Audit Checks
- Most reputable e-file software will have built-in error checks that compare your entries against IRS business rules. Pay close attention to any warnings or errors the system flags and resolve them.
Sub-heading: Manual Review for Accuracy and Completeness
- Print a Draft: If possible, print a draft PDF of your completed Form 990-EZ and all attached schedules. Review it line by line.
- Cross-Reference: Compare the data on the form with your original financial records and source documents. Ensure numbers match and categories are correct.
- Read Instructions (Again): Refer back to the IRS instructions for Form 990-EZ if you have any doubts about a specific line item.
- Check Narrative Sections: Ensure your program service accomplishments and any explanations on Schedule O are clear, concise, and accurately reflect your organization's activities.
- Verify Basic Information: Double-check your EIN, organization name, address, and tax year dates. These are common points of error.
- Signatures: Ensure the form is properly signed by an authorized officer of the organization. With electronic filing, this often involves an e-signature process, which may require you to sign Form 8879-TE or similar.
Step 6: Transmit Your Return to the IRS
Once you're confident that your Form 990-EZ is accurate and complete, it's time to send it off!
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Sub-heading: Electronic Signature Process
- Your e-file provider will guide you through the electronic signature process. This often involves an IRS e-file signature authorization form (Form 8879-TE) or a similar document, which you might need to sign and return to the provider before they can transmit your return. Ensure you follow their specific instructions carefully.
Sub-heading: Submission
- Click the "Submit" or "Transmit" button. The e-file provider will then securely transmit your Form 990-EZ and any attached schedules directly to the IRS.
Sub-heading: Confirmation and Acceptance
- After submission, the e-file provider will typically send you an email confirmation that your return has been transmitted.
- Crucially, you'll receive a second notification from the provider, usually within 24-48 hours, informing you whether the IRS has accepted or rejected your return.
- Keep these acceptance notifications! They are your proof of timely filing. If your return is rejected, the notification will usually provide a reason, and you'll need to correct the errors and retransmit. Most providers allow free retransmission of rejected returns.
Step 7: Maintain Records and Fulfill State Requirements
Your filing journey isn't quite over once the IRS accepts your return.
Sub-heading: Keep Copies
- Save Digital Copies: Download and save PDF copies of your final, accepted Form 990-EZ and all schedules.
- Physical Copies (Optional but Recommended): Consider printing a physical copy for your organization's records.
- Record Retention: The IRS generally requires you to keep records that substantiate any income, deduction, or credit for three years from the date the return is filed. Keep your organization's determination letter, articles of incorporation, bylaws, and board minutes permanently.
Sub-heading: State Filing Requirements
- Check State Regulations: Many states require tax-exempt organizations to file a copy of their Form 990-EZ or a similar state-specific report. These requirements vary by state. Failure to meet state requirements can lead to penalties or loss of state-level exempt status.
- Consult State Charity Regulators: Visit your state's Attorney General's office or Secretary of State's website, or consult with a local tax professional familiar with nonprofit compliance, to understand your specific state obligations. Some e-file providers may also offer state filing options.
Frequently Asked Questions (FAQs) - How to File IRS Form 990-EZ Electronically
Here are 10 common questions related to electronically filing Form 990-EZ, with quick answers to help you navigate the process:
How to determine if my organization needs to file Form 990-EZ? Generally, if your tax-exempt organization's gross receipts are less than $200,000 and total assets are less than $500,000 at the end of the tax year, you are eligible to file Form 990-EZ.
QuickTip: Read section by section for better flow.
How to find an IRS-approved e-file provider for Form 990-EZ? You can find a list of IRS-authorized exempt organization e-file providers on the official IRS website. Search for "exempt organizations Modernized e-File (MeF) providers."
How to prepare for filing Form 990-EZ electronically? Gather all your financial statements (income, expenses, balance sheet), organizational details (EIN, address), program service accomplishments, and compensation information for key personnel before starting the e-filing process.
How to avoid common errors when e-filing Form 990-EZ? Utilize the e-file provider's built-in error checks, meticulously review all entries against your source documents, double-check all basic information (EIN, dates), and use Schedule O for clear explanations.
How to file an extension for Form 990-EZ if I need more time? You can apply for an automatic 6-month extension by electronically filing Form 8868, Application for Extension of Time to File an Exempt Organization Return, before your original due date.
How to amend a previously filed Form 990-EZ electronically? To amend a return, you'll typically file a new Form 990-EZ through your e-file provider, checking the "Amended Return" box in Item B, and including all corrected information.
QuickTip: Revisit key lines for better recall.
How to ensure my electronic submission is accepted by the IRS? Choose an IRS-approved e-file provider, carefully complete all required fields, resolve any errors flagged by the software, and ensure an authorized officer signs the electronic signature authorization form. You'll receive an acceptance confirmation from your provider.
How to handle attachments and schedules when filing Form 990-EZ electronically? Your chosen e-file software will guide you through adding and completing any necessary schedules (like Schedule A, B, or O) as part of the electronic filing process. These are submitted along with the main form.
How to verify my organization's tax-exempt status or past filings? You can use the IRS Tax Exempt Organization Search tool on the IRS website to verify your organization's tax-exempt status and view past publicly disclosed filings.
How to know my Form 990-EZ due date? Form 990-EZ is due on the 15th day of the fifth month following the end of your organization's tax year. For calendar year filers (year ends December 31), the due date is May 15 of the following year. If the due date falls on a weekend or holiday, it shifts to the next business day.
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