4 Tax Tips Your Nonprofit Clients Should Know Before They File

Before you know it, the looming tax deadline will be upon us. For your nonprofit clients, preparing for and meeting the tax-filing deadline can be just another task on their already long to-do list.

To help, we’ve gathered four key tax-filing tips that you can pass along to your clients, so that this year they’ll be ahead of the game.*

Know your 990 Forms

The all-important 990 Form is what allows a nonprofit to retain its tax-exempt status. But with four versions of the form, how do organizations know which one to use? Before filing taxes, nonprofits need to know the differences among the four 990 Forms and when to use them. 

  • If the organization’s gross receipts are over $200,000 or its total assets exceed $500,000, the Internal Revenue Service requires it to complete the full Form 990.
  • If the organization’s gross receipts are less than $200,000 and its total assets are less than $500,000, the simpler 990-EZ Form is an option.
  • For organizations with gross receipts that are less than $50,000, the 990 Postcard Form (a simple, online version of the 990 form) may be used.
  • Regardless of the gross receipts or assets, all nonprofit private foundations are required to complete the 990-PF Form.

Always file on time

According to the nonprofit website Global Giving, filing late not only may result in fines but also could put the organization in jeopardy of losing its tax-exempt status. Here are some of the possible consequences:

  • Late filers could face a penalty fee of $20 per day, with a maximum penalty of $10,000 or up to 5% of their gross receipts.
  • Larger organizations could be fined $100 per day, with a maximum penalty of $50,000.
  • Organizations that fail to submit a 990 form for three consecutive years will likely lose their tax-exempt status.

Don’t include personal information

The 990 Form is a public document that can be searched for on the website of the secretary of state or attorney general of the state where the organization is incorporated. For this reason, organizations shouldn’t include any personal information, such as Social Security numbers or bank account logins, that could put the nonprofit at risk.[1]

In general, this type of information is not required on a 990 Form; therefore, it shouldn’t be an issue. However, some organizations may feel the need to include additional or unnecessary information.

Know how to file an extension

There are a number of situations where your nonprofit clients may need to file an extension. Whatever the situation, if an organization needs more time, it will only be allowed a six-month extension for any given tax year.

For organizations filing an extension, Form 8868 is required. Form 8868 is used by an exempt organization to request an automatic six-month extension of time to file its tax return. It is important to note that extending the time to file a return does not extend the deadline to pay the tax.[2]

To learn more about annual filing requirements for nonprofits, along with resources and tools, organizations should visit the IRS website.

About Charity First

The incredible services that nonprofits provide come with unique and complex risks that are part of their everyday work in serving the elderly, children and other vulnerable populations. It is why Charity First is committed to providing our retail partners across the country with best-in-class underwriting, consistent and responsive service, and risk management services that include workers’ compensation coverage and accident insurance for volunteers and participants. To learn more, please contact us at 800-352-2761 or marketing@charityfirst.com.


[1] Global Giving.

[2] IRS.