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When Foundation Group launched in 1995, we were the first specialty firm in America dedicated exclusively to starting nonprofits and helping them to stay compliant with state and federal regulations.

20 years later, we're still going strong!  In fact, our client base continues to grow exponentially every year...and we've never been more committed to bringing our clients the expertise they need to see their vision come to pass.  Simply put, we love what we do and we're passionate about doing it with excellence!

We were the first...and we've never stopped leading!  Call us and see why we are America's first choice for nonprofit startup and compliance services.

What is Form 990-EZ?

Form 990EZ.5891f5924cb32

This article is the third in our series that explores the various versions of IRS Form 990.  Form 990-EZ is annual information return filed by small-medium sized public charities and certain other nonprofits, at least as measured by gross revenue.

Description

The name itself, Form 990-EZ, is somewhat of a misnomer.  While it is certainly easier to prepare than other full-form variants, it is by no means easy.  It is the lowest threshold version that really resembles a corporate tax return, only more thorough.  The IRS is looking for all the demographic information contained in Form 990-N, plus:

  • A full accounting of income and expenses by category
  • Details on grants and distributions given by the nonprofit
  • Balance sheet that aligns with the income and expense information
  • Details about specific program accomplishments and associated expenses
  • A list of current board members, their addresses, hours worked for the organization, and details regarding any form of compensation, whether cash or benefits
  • Quite a few Yes/No/Explain type questions covering topics from conflict of interest to indoor tanning services (not kidding about that one!)
  • Details regarding compensation of executive staff
  • A breakdown of the sources of income over the past 5 years (or the life of the nonprofit, if operating less than 5 years)
  • And, finally, details on any donors to the organization generally giving more than $5,000 during the past year

990-EZ Filing Requirements

Like all versions, Form 990-EZ is due on the 15th of the 5th month, following the end of the fiscal year.  There is a paper version of the form which may be filed by mail, as well as the ability to file electronically with the IRS (which they prefer).  A six-month extension is available by filing IRS Form 8868 by the original due date of the return.

Another stipulation, and the most important one, is the associated revenue and asset-valuation thresholds.  In order to qualify to file Form 990-EZ, a nonprofit should have gross income of more than $50,000, but less than $200,000 during the past fiscal year.  In addition, the total valuation of all assets should be less than $500,000.  If an organization’s assets are worth more than that, a full Form 990 will be required, regardless of revenue.

A Consideration

A question we encounter rather frequently involves nonprofits with annual gross revenue that tends to hover right around the lower or upper end of the range, often jumping back and forth across the line from year to year.  In most cases, it is considered best practice to file up and stick with that choice.  In other words, if a nonprofit usually finds itself liable for Form 990-N some years , and Form 990-EZ in others, stick with Form 990-EZ every time.  The same holds true for organizations at the upper end.  File the full Form 990 every time.

Why?  It’s never wrong to err on the side of more disclosure and more transparency.  Plus, if your nonprofit finds itself liable for the longer version in alternating years, it’s usually better for your board, staff, and third-party compliance providers to have a consistent preparation and filing experience each year.  You may not be legally required to follow this advice, but it’s still good advice!

Conclusion

If you need assistance with Form 990-EZ, or any other version, be sure and let us know. We’re here to help.

 

Greg McRay, EA

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

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John
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Hello Greg: I came across a discussion on a different blog post while doing a Google search…but the comments section is closed. Hope you don’t mind if I run something by you here. Please see this previous comment you made for reference. https://www.501c3.org/how-to-pay-your-nonprofits-staff/#comment-15988 Would it be possible to elaborate in more detail on this matter of an employee deferring compensation until a later date when the organization might be on better footing. Also, I know California (and maybe some other states) allow for one person to incorporate the organization and form a one person board. Are these individuals allowed to… Read more »
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