5 Ways To E-File Form 990 Successfully

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The annual Form 990 filing season can be a daunting task for many non-profit organizations. The complexity of the form, coupled with the importance of accuracy and timeliness, can make it a source of stress and anxiety. However, with the right approach and tools, e-filing Form 990 can be a smooth and successful process.

Every year, the Internal Revenue Service (IRS) requires most tax-exempt organizations to file Form 990, also known as the Return of Organization Exempt from Income Tax. This form is used to report the organization's financial activities, governance, and compliance with tax laws. The IRS uses the information provided on Form 990 to assess the organization's tax-exempt status and ensure compliance with federal tax laws.

In recent years, the IRS has encouraged non-profits to e-file Form 990, as it reduces errors and processing time. However, many organizations still struggle with the e-filing process. In this article, we will explore five ways to e-file Form 990 successfully, ensuring that your organization meets the necessary requirements and avoids common pitfalls.

Understanding the Requirements for Form 990

Before diving into the e-filing process, it's essential to understand the requirements for Form 990. The form is typically due on the 15th day of the fifth month after the organization's accounting period ends. For example, if your organization's tax year ends on December 31st, the Form 990 is due on May 15th of the following year.

The IRS requires that all tax-exempt organizations, except for churches and certain government entities, file Form 990. The form consists of several sections, including:

• Part I: Summary of the organization's financial activities
• Part II: Signature block and certification
• Part III: Statement of program service accomplishments
• Part IV: Checklist of required schedules
• Part V: Statements regarding other IRS filings and tax compliance
• Part VI: Governance, management, and disclosure
• Part VII: Compensation of officers, directors, trustees, and key employees
• Part VIII: Statement of revenue
• Part IX: Statement of functional expenses
• Part X: Balance sheet
• Part XI: Financial statements and reporting
• Part XII: Disclosure of certain information

Types of Form 990

There are three types of Form 990:

• Form 990: This is the standard form for most tax-exempt organizations.
• Form 990-EZ: This is a simplified version of the form, available for organizations with annual gross receipts of $200,000 or less and total assets of $500,000 or less.
• Form 990-N: This is an e-postcard, available for organizations with annual gross receipts of $50,000 or less.

Preparing for E-Filing

To ensure a smooth e-filing process, it's essential to prepare your organization's Form 990 in advance. Here are some steps to follow:

• Gather all necessary financial statements, including the balance sheet, income statement, and statement of functional expenses.
• Review the organization's governance and management structures to ensure compliance with IRS regulations.
• Compile information on the organization's program service accomplishments and revenue sources.
• Ensure that all required schedules are completed and attached to the form.

Using Form 990 Software

Using Form 990 software can simplify the preparation and e-filing process. These software programs typically include features such as:

• Data import from financial statements
• Automatic calculation of totals and subtotals
• Error checking and validation
• Electronic signature and certification
• Direct e-filing with the IRS

Some popular Form 990 software options include TaxAct, TurboTax, and Form 990 Software.

E-Filing Form 990

Once your organization's Form 990 is prepared, it's time to e-file with the IRS. Here are the steps to follow:

• Log in to the IRS e-file system using your organization's EIN and password.
• Select the correct form type (Form 990, Form 990-EZ, or Form 990-N).
• Upload the completed form and supporting schedules.
• Review the form for errors and validation.
• Submit the form and receive a confirmation number.

Common E-Filing Errors

To avoid common e-filing errors, ensure that:

• The form is complete and accurate.
• All required schedules are attached.
• The form is signed and certified electronically.
• The organization's EIN is correct.

Post-Filing Compliance

After e-filing Form 990, it's essential to maintain compliance with IRS regulations. Here are some post-filing requirements:

• Make the form available for public inspection upon request.
• Maintain accurate and complete records of financial transactions.
• Ensure compliance with tax laws and regulations.

Audit and Examination Procedures

In the event of an audit or examination, ensure that:

• All required documentation is available and accurate.
• The organization's financial statements are complete and compliant.
• Governance and management structures are in place and compliant.

Conclusion

E-filing Form 990 can be a complex and time-consuming process, but with the right approach and tools, it can be a smooth and successful experience. By understanding the requirements for Form 990, preparing in advance, using Form 990 software, and following post-filing compliance procedures, your organization can ensure a successful e-filing experience.