Reflections on 2021 Tax Season
In this week’s blog, Tom O’Saben reflects on 2021 Tax Season and highlights key takeaways – such as people with investments need later appointments and tax practioners need to communicate…
The April 18 deadline for 2021 individual income tax returns passed two weeks ago, but another deadline looms just two weeks from today. If you prepare returns for exempt organizations, and they operate on a calendar year basis, their returns are due on Monday, May 16.
Form 990
Form 990, Return of Organization Exempt From Income Tax, is a 12-page return requiring financial and operational data about the exempt organization. The IRS has prepared 16 schedules that may be required, depending on the composition of the organization’s governing body, its contributions, and various other information and situations that may apply to larger exempt organizations.
Preparation of Form 990 requires input from the organization’s board. The completed form must list the members who comprise the governing body of the exempt organization. This version of the form poses questions about the organization’s policies as approved by its governing body, such as a conflict-of-interest policy and a whistleblower policy, to name a few.
Some situations require exempt organizations to file Form 990 or Form 990-EZ regardless of their size, such as when it sponsors any donor-advised funds or is a controlling organization.
Form 990-EZ
This form has some shorter cousins for smaller exempt organizations. If the exempt organization has gross receipts under $200,000 and total assets under $500,000, it can generally choose to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax. This form is four pages long and may include additional schedules in some circumstances.
Form 990-N
Organizations having gross receipts of $50,000 or less may choose to file a Form 990-N, also known as an e-Postcard.
Application for Extension is Available
This information may take a while to collect. Fortunately, a six-month extension is available by filing Form 8868, Application for Automatic Extension of Time To File an Exempt Organization Return. Not all state exempt organization returns follow the federal times for due dates or extension length. For example, Illinois Form AG990-IL, Illinois Charitable Organization Annual Report, is due June 30 for calendar year organizations, but only a 60-day extension is available.
A final note of caution. Exempt organization returns are made publicly available by the IRS according to law. Therefore, these returns should not include personally identifiable information, such as social security numbers or other confidential information.
The University of Illinois Tax School will cover exempt organizations at the upcoming 2022 Fall Tax School. Be sure to sign up for email notifications to be alerted when 2022 Fall Tax School registration opens in July.
By John W. Richmann, EA, MBA
Tax Materials Specialist, U. of I. Tax School
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