Tax season for nonprofits can be confusing and stressful. If your organization has grown past the basic e-Postcard but isn’t large enough to require the full 12-page tax return, IRS Form 990-EZ may be the right option.
Officially titled the Short Form Return of Organization Exempt from Income Tax, this 4-page return is more than just a filing requirement. It’s also a public record. Grantmakers, individual donors, and charity watchdogs regularly look at 990-EZ filings to review an organization’s finances and activities before making grants or contributions.
Here is what you need to know to prepare, complete, and e-file Form 990-EZ accurately.
Form 990-EZ Filing Thresholds: Do You Qualify?
To file Form 990-EZ, your organization generally needs to meet two financial requirements based on its tax year.
| Form Variant | Gross Receipts | Total Assets |
|---|---|---|
| Form 990-N (e-Postcard) | Normally $50,000 or less | No asset threshold |
| Form 990-EZ | Less than $200,000 | Less than $500,000 |
| Form 990 | $200,000 or more | $500,000 or more |
Important Rule: The IRS reviews both numbers on Form 990-EZ. If your gross receipts are $200,000 or more or your total assets are $500,000 or more at the end of the tax year, you generally must file Form 990 instead. Special rules apply to certain types of organizations.
Who Cannot File Form 990-EZ?
Meeting the financial requirements does not automatically mean every organization can use Form 990-EZ. Some organizations must file a different return, including:
- Sponsoring organizations of donor-advised funds
- Organizations operating one or more hospital facilities
- Section 501(c)(29) nonprofit health insurance issuers
- Certain controlling organizations under section 512(b)(13) when applicable transfer rules apply
Section 501(c)(21) black lung trusts have separate filing requirements and generally file Form 990-BL when gross receipts are $50,000 or more. Private foundations generally file Form 990-PF instead.
Other organizations, including section 509(a)(3) supporting organizations, section 501(c)(7) and 501(c)(15) organizations, section 527 political organizations, and section 4947(a)(1) nonexempt charitable trusts, may still qualify to file Form 990-EZ but follow specific filing rules.
If your organization falls into one of these categories, check out the current IRS instructions before choosing Form 990-EZ.
Important Deadlines, Extensions, and Penalties
Calculating Your Due Date
Your Form 990-EZ is generally due on the 15th day of the fifth month after your accounting year ends.
- Calendar Year Filers (Dec. 31 end): Due May 15.
- Fiscal Year Filers (e.g., June 30 end): Due November 15.
If your deadline falls on a weekend or legal holiday, you generally have until the next business day to file.
Need Extra Time?
If your books aren’t closed in time, don’t panic. You can generally request an automatic six-month extension by filling Form 8868 on or before the original due date.
Just remember: an extension gives you more time to file the return. It does not extend the time for paying any tax that may be owed.
What Happens If You File Late?
Daily Fines: A late Form 990-EZ can result in a penalty of $25 per day, up to the lesser of $13,000 or 5% of the organization’s gross receipts for the year, unless an exception applies. Organizations with annual gross receipts exceeding $1,309,500 are subject to higher penalties.
3-Year Automatic Revocation Rule: The IRS generally will automatically revoke an organization’s federal tax-exempt status if it fails to file a required annual return or notice for three consecutive years.
Pre-Filing Checklist: What to Collect First
Before you begin filling out the form, gather these key items to make the process easier:
- Legal Information: Official legal name, current mailing address, and Employer Identification Number (EIN).
- Year-End Financials: Completed Profit & Loss statement and Balance Sheet.
- Compensation and Contractor Records: W-2, W-3, and applicable Form 1099 records, along with compensation information for officers, directors, trustees, key employees, employees, and independent contractors.
- Donor Records: Information about contributions that may require Schedule B.
- Program Information: Key information about your organization’s main programs and accomplishments.
Having these records ready can make it easier to complete the return and find mistakes before filing.
Walkthrough of Form 990-EZ
Form 990-EZ contains six parts across four pages. Parts I through V must generally be completed by all Form 990-EZ filers, while Part VI is completed by Section 501(c)(3) organizations and Section 4947(a)(1) nonexempt charitable trusts.
Heading Section: Basic Identification
Fill in the applicable items in the heading section. Pay close attention to your accounting method- cash, accrual, or another method- because it should match the method used to maintain your accounting records.
Item L asks you to determine your gross receipts. This also helps confirm whether your organization meets the general gross-receipts requirement for Form 990-EZ.
Part I: Revenue, Expenses, and Net Assets
Part I reports your organization’s revenue, expenses, and changes in net assets during the tax year.
- Line 1 (Contributions, Gifts, Grants, and Similar Amounts): Report on applicable donations, contributions, and grants.
- Line 2 (Program Service Revenue): Report revenue from the organization’s program services, including applicable government fees and contracts.
- Line 3 (Membership Dues): Report applicable membership dues and assessments.
- Line 4 (Investment Income): Report applicable interest, dividends, rents, and other investment income.
- Lines 5–7: Report applicable gains or losses from asset sales, gaming and fundraising events, and sales of inventory.
- Lines 10–16 (Expenses): Report on expenses such as grants paid, employee compensation, professional fees, occupancy costs, and other expenses.
Lines 18–21 (Net Asset Reconciliation): Calculate the excess or deficit for the year and compare it with beginning and ending net assets.
Part II: Balance Sheets
Compare your organization’s financial position at the beginning and end of the year. Report cash, investments, property, other assets, liabilities, and net assets.
Pro Tip: The net assets reported on Line 27, Column (B), should agree with the amount reported on Line 21.
Part III: Program Service Accomplishments
This is your chance to explain what your organization actually did during the year.
- Clearly state your primary purpose.
- Describe the organization’s three largest program services.
- Include numbers when possible. For example: “Tutored 150 students for 1,200 hours after school.”
- Report the related program service expenses.
Part IV: Officers, Directors, Trustees, and Key Employees
Report on the applicable officers, directors, trustees, and key employees who served during the year.
The form asks for information such as names and titles, average hours per week, reportable compensation, benefits, and other compensation, where required.
Part V: Other Information & IRS Compliance
Part V contains questions about several areas of the organization’s activities and compliance.
Unrelated Business Income (Lines 35a–35b): Line 35a Line 35a asks whether the organization had $1,000 or more of unrelated business gross income from business activities during the year. If applicable, the organization may also have a Form 990-T filing requirement.
Political Activity (Line 46): Line 46 asks if the organization participated in political campaign activities. If applicable, Schedule C may also be required.
Part VI: 501(c)(3) Organizations Only
Part VI contains additional questions for organizations described under Section 501(c)(3).
- Line 47: Reports applicable lobbying activities.
- Line 48: Asks whether the organization qualifies as a school.
- Line 49: Addresses certain transfers to related exempt non-charitable organizations.
- Line 50: Reports certain highly compensated employees.
- Line 51: Reports certain highly compensated independent contractors.
- Line 52: Addresses Schedule A and public charity status.
Required Schedules to Attach
Depending on your organization’s activities and answers on Form 990-EZ, additional schedules may be required.
- Schedule A: Required for organizations described under Section 501(c)(3) and certain Section 4947(a)(1) nonexempt charitable trusts that file Form 990-EZ.
- Schedule B: May be required if the organization meets applicable contributor-reporting rules. The requirements vary depending on the organization’s tax-exempt status and situation.
- Schedule O: Used to provide additional explanations and information when required by the form or instructions.
Other schedules, including Schedules C, E, G, L, or N, may also apply depending on the organization’s activities.
E-Filing Is Mandatory: How TaxZerone Simplifies Your 990-EZ
Form 990-EZ must be filed electronically. The IRS no longer accepts paper Form 990-EZ returns. TaxZerone is an online service for preparing and e-filing Form 990-EZ and other returns of tax-exempt organizations.
For nonprofits that want to complete the process online, TaxZerone offers features designed to make preparation and submission easier, including IRS validation checks, electronic filing, and support for applicable schedules.
Review all the details about the organization, financial data, schedules, and any necessary explanations before you submit. It is still up to the organization to ensure that its return is properly completed and accurate.
Frequently Asked Questions
1. What is Form 990-EZ and who is required to file it?
Form 990-EZ is the IRS short-form annual information return for tax-exempt organizations. It is required for organizations that meet all three of the following conditions:
- Tax-exempt status under section 501(c), 527, or 4947(a)(1)
- Gross receipts < $200,00 and $200,000 for the tax year
- Total assets < $500,000 at the end of the tax year
2. Does Form 990-EZ require Schedule B?
Not every organization that files Form 990-EZ is required to attach Schedule B. An organization generally must file Schedule B when it meets the IRS requirements for reporting certain contributors or contributions. The organization should review the Schedule B instructions to determine whether the schedule is required for its specific circumstances.
3. How many consecutive years can an organization fail to file Form 990-EZ before losing tax-exempt status?
An organization that is required to file an annual Form 990-series return can generally lose its federal tax-exempt status after failing to file for three consecutive tax years. The IRS automatically revokes the organization’s tax-exempt status after three consecutive years of non-filing, subject to applicable rules and exceptions.
4. Can Form 990-EZ be amended after filing to correct a mistake?
Yes. An organization can generally file an amended Form 990-EZ to correct information reported on a previously filed return. The organization should follow the IRS requirements for amended returns and, if filing electronically, the current procedures of its IRS-authorized e-file provider.