How to File Form 990 for a Nonprofit (Step-by-Step Guide)
Filing Form 990 is an important responsibility for nonprofit organizations.
Each year, nonprofits must report financial activity to the Internal Revenue Service. The return provides transparency to donors, grant makers, and the public.
Many nonprofit leaders begin preparing the form but quickly feel overwhelmed by the instructions and reporting requirements. This guide explains the process in simple steps so nonprofit leaders understand how to prepare and file the return correctly.
What Is Form 990?
Form 990 is the annual information return that most tax-exempt organizations must file.
The form reports key information about the nonprofit, including:
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total revenue and expenses
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program activities and accomplishments
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board members and officers
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governance policies
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compensation for leadership
Because the return becomes public record, it must be accurate and complete.
Determine Which Form 990 Your Nonprofit Must File
Not every nonprofit files the same version of the return.
The version required depends on annual revenue and total assets.
Form 990-N (e-Postcard)
Small nonprofits with gross receipts of $50,000 or less usually file Form 990-N.
This is the simplest filing option.
Form 990-EZ
Organizations with gross receipts under $200,000 and assets under $500,000 typically file Form 990-EZ.
This version requires more financial reporting.
Full Form 990
Larger nonprofits must file the full Form 990.
This form includes detailed disclosures about finances, programs, and governance.
Step 1: Gather Financial Records
Before preparing the return, collect the nonprofit’s financial information.
Important records include:
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profit and loss statement
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balance sheet
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donation records
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grant income records
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bank statements
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expense receipts
These records help ensure the totals reported on Form 990 match the nonprofit’s accounting records.
Step 2: Confirm Organization Information
The first section of the return asks for basic organization details.
Verify that the following information is correct:
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legal organization name
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employer identification number (EIN)
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mailing address
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website address
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tax-exempt classification
Errors in this section can delay processing by the Internal Revenue Service.
Step 3: Report Revenue and Income
The return requires nonprofits to report all sources of revenue.
Common income sources include:
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donations and contributions
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grants received
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program service revenue
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membership dues
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fundraising events
Make sure the totals reported match your financial statements.
Step 4: Report Expenses
Expenses must be categorized into three main areas.
Program Service Expenses
Costs directly related to the nonprofit mission.
Management and Administration
Costs for running the organization.
Fundraising Expenses
Costs associated with raising donations.
Correct classification helps donors understand how funds are used.
Step 5: Describe Program Accomplishments
One of the most important sections of Form 990 is the program accomplishment section.
Nonprofits should clearly explain:
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the programs they operate
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the community they serve
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the results of their work
Strong program descriptions help donors understand the organization’s impact.
Step 6: List Board Members and Officers
The return requires disclosure of nonprofit leadership.
This includes:
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board members
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officers
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key employees
Titles and compensation must also be reported if individuals receive payment.
Step 7: Answer Governance Questions
The governance section asks about nonprofit policies and oversight.
Examples include:
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conflict of interest policy
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whistleblower policy
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document retention policy
These questions help the Internal Revenue Service and the public understand how the nonprofit is managed.
Step 8: Review the Return Before Filing
Before submitting Form 990, nonprofit leaders should review the entire return.
Best practice is to:
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share the draft with board members
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allow time for questions
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confirm all financial information is correct
Many organizations allow 7 to 10 days for review.
Step 9: File the Return Electronically
Most nonprofit organizations must submit Form 990 electronically.
After filing, nonprofits should:
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save a copy of the return
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maintain supporting documentation
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store records for several years
Proper recordkeeping helps support future filings and audits.
What Happens If a Nonprofit Does Not File Form 990?
Nonprofits that fail to file the return for three consecutive years automatically lose tax-exempt status.
This rule is enforced by the Internal Revenue Service.
Losing tax-exempt status can make it difficult for the organization to receive donations and grants.
That is why filing each year is essential.
Our Final Thoughts
Preparing Form 990 can feel complex for nonprofit leaders.
Understanding the steps involved helps organizations remain compliant and transparent.
Accurate reporting also strengthens trust with donors, grant makers, and the communities nonprofits serve.
Frequently Asked Questions (FAQ)
What is Form 990 used for?
It reports financial activity and shows how the nonprofit fulfills its mission. The return also ensures transparency to the public, donors, and grant makers.
Do all nonprofits have to file Form 990?
Most must. Small nonprofits (<$50,000 receipts) file Form 990-N. Medium nonprofits file 990-EZ. Larger organizations file the full Form 990.
When is Form 990 due?
Due the 15th day of the fifth month after the fiscal year end. Example: Calendar-year nonprofits file by May 15. Extensions may be requested.
What happens if a nonprofit does not file Form 990?
Nonprofits that fail to file for three consecutive years automatically lose tax-exempt status. Reinstatement is required to regain compliance.
Is Form 990 public record?
Yes. Donors, grant makers, and watchdog groups can view filed Form 990s. Accuracy is essential.
Can a nonprofit prepare Form 990 without an accountant?
Yes. Small nonprofits can self-prepare, but professional review ensures accuracy, proper expense classification, and compliance.
Related Resources
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Nonprofit Bookkeeping Guide
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Nonprofit Compliance Checklist
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Nonprofit Reporting Requirements