Not everyone is a tax attorney or accountant, that's why you might need Form 990 instructions. You'd think these types of things would be self explanatory and fully accessible on a mainstream government website. Think again. Sometimes it's better to have the experts break things down for you.
You will need:
- Form 990
- Your Business Information
- Take a look at the Header section. This area should be rather self explanatory. List the name of your organization and all relevant business information: address, city, town and zipcode. Be sure to be truthful (should go without saying) and complete all sections with as much detail as possible. Use this tip on subsequent sections of form.
- List all income and provide sources. (Part I.) Since this form is for non-profit entities, don't worry your income disclosure is not for tax purposes (albeit the lack thereof.) However, to maintain your non-profit status, and to have it officially recognized by the IRS, it's important to list all forms of income and how they were acquired. This section includes Revenue, Expenses and Net Assets. Remember, the sum of these lines is totaled up on line 12.
- Breakdown the expenses from your program, staff and fundraising costs. All of these details can be found on lines 13-17. Take a look at Line 16 – Payments to affiliates. There might some confusion on what this means. Most payments to affiliates include money given to a local charity, or a sub-group who supports your cause. Most of the time Line 16 is left blank.
- Disclose all net assets. This is where the fun begins. Lines 18-22 will be your stomping grounds for the next few minutes. First, in 18, you need to find the amount of all relevant expenses. Next, in lines 19-21 find your revenue less expense (19), total assets (20), total liabilities (21) and subtract line 20 from line 21 to find net assets or fund balances.
- Sign and print your signature. (Part II.) Follow the instructions and sign your name the same throughout Form 990.
- List all programs and relevant cost for each. (Part III.) The official name for this section is, "Statement of Program Service Accomplishments." If someone who isn't associated with your organization took a look at this section, they should be able to sum up the basics of your initiatives. Make sure to include detail, and be specific on all entries. The first blank asks, "What is the organization's primary exempt purpose?" There's a reason why this blank isn't very big. You should know your organization well enough to explain this in a few words. Parts A-D simply ask you to detail all programs and all associated costs of each. Part F is where it comes together. Detail the total costs of all programs.
- Detail any self dealing transactions. Skip down to "Statements About Activities." Just because a board member or the organization Chairperson benefited from a "self dealing" transaction does not make it improper. Simply answer the questions "Yes" or "No." If yes, detail what the transaction was and act accordingly.
- State whether you are a private foundation or non-profit (public) charity. (Part IV.)This is important for one reason. Most non-profit charities are exempt from paying any taxes, and have the option of lobbying members of congress. Private foundations usually have contribution limits and are sometimes required to pay a marginal tax. Parts 5-13 on Form 990 list all of the necessary information regarding private foundations or non-profit charities.
Tips and warnings
- As stated in the beginning, be truthful in all answers. Lying on a tax form is against the law. Giving unscrupulous answers will not only get you fined and possibly a nice prison sentence, your time, money and energy will also be at stake.