Navigating the complexities of nonprofit accounting can be daunting, but that’s where Ridgewise comes in. We specialize in handling all your accounting and tax needs, ensuring your organization remains compliant and efficient. One key aspect we focus on is the Form 990-EZ, a crucial document for small to mid-sized nonprofits.
Form 990-EZ serves as a streamlined version of the standard Form 990, providing a less cumbersome way to report your organization’s financial activities. At Ridgewise, we understand the nuances of this form and can help you complete it accurately, saving you time and reducing the risk of errors. Let us take care of the paperwork so you can focus on what truly matters—advancing your mission.
Understanding Form 990-EZ
Form 990-EZ simplifies the reporting process for small to mid-sized nonprofits. Understanding its purpose and requirements is critical for accurate compliance.
What Is Form 990-EZ?
Form 990-EZ is a short version of the IRS Form 990, designed for tax-exempt organizations with gross receipts under $200,000 and total assets under $500,000. It serves as an annual information return, ensuring transparency and accountability in nonprofit operations.
Who Needs to File Form 990-EZ?
Nonprofits with gross receipts below $200,000 and assets under $500,000 must file Form 990-EZ. These organizations include public charities, social welfare groups, and other tax-exempt entities. Form 990-N may be required for smaller organizations with receipts under $50,000.
Key Components of Form 990-EZ
Form 990-EZ consists of important sections that nonprofits should complete accurately to ensure compliance with IRS requirements. These sections cover identifying information, financial data, and other necessary filings.
Identifying Information Section
The form’s initial section requires specific information about the organization. This includes:
- Name and Address: Input the legal name and address of the nonprofit.
- EIN (Employer Identification Number): Provide the unique EIN assigned by the IRS.
- Principal Officer: List the name, title, and address of the principal officer.
- Type of Organization: Indicate the type of nonprofit, e.g., 501(c)(3) public charity.
Revenue, Expenses, and Changes in Net Assets
This section requires detailed financial data. It includes:
- Revenue: Report contributions, grants, program service revenue, and other income sources. For example, detail funds received from donors or government grants.
- Expenses: Outline program services, management, general expenses, and fundraising costs. Each spending category should be itemized clearly.
- Net Assets: Document changes in net assets over the reporting period. Calculate the difference between total revenue and total expenses to illustrate financial status.
Other IRS Filings and Tax Compliance
Nonprofits must confirm they’ve met other IRS requirements. This involves:
- Required Schedules: Check appropriate boxes for any attached schedules, such as Schedule A for public charities.
- Tax Compliance Questions: Answer questions on subjects like lobbying activities, donor-advised funds, and related filings.
- State Filings: Verify if the organization submitted required state tax documents.
It’s critical to ensure accuracy in these sections to avoid IRS penalties and maintain good standing.
Ridgewise offers expert assistance with Form 990-EZ and other bookkeeping requirements for individuals and businesses. Our experienced team can navigate complex nonprofit tax regulations, ensuring compliance and financial accuracy.
Step-by-Step Instructions for Filling Out Form 990-EZ
Follow these steps to complete Form 990-EZ, ensuring you meet IRS requirements for your nonprofit organization.
Preparing to Complete the Form
Gather all necessary documents before starting. Have last year’s Form 990-EZ, detailed financial statements, and records of your nonprofit’s revenue and expenses. Ensure you have accurate records of all transactions.
Detailing Revenues and Expenses
Enter your organization’s total revenue in Part I, ensuring to itemize each source of income. Include donations, grants, program service revenue, and any other income. For expenses, provide detailed entries for salaries, rent, utilities, and other operational costs. You can find these in Part II of the form.
Ensuring Accuracy and Compliance
Review all entries twice to ensure no mistakes. Double-check totals, confirm you’ve itemized all income and expenses, and verify compliance with IRS requirements. If unsure, consult Ridgewise to avoid penalties.
How Ridgewise Can Help
Ridgewise helps nonprofits accurately complete Form 990-EZ. Our bookkeeping services ensure your financial records are up to date. We assist individuals and businesses with bookkeeping, offering expert advice to keep your organization compliant with tax regulations. Make sure to reach out to Ridgewise for any bookkeeping needs you have.
Common Mistakes to Avoid When Filing Form 990-EZ
Accurate filing of Form 990-EZ ensures compliance and avoids penalties. Let’s explore common mistakes and how to prevent them.
Incomplete or Inaccurate Entries
Ensure every field on Form 990-EZ contains correct data. Incomplete entries or misspelled organization names can lead to processing delays. Verify financial details like revenues and expenses against your records. Incorrect figures may trigger IRS audits and penalties.
Filing Deadlines and Penalties
Submit Form 990-EZ by the 15th day of the 5th month after the end of your fiscal year. Late submissions incur penalties of $20 per day, up to $10,000 or 5% of your gross receipts. Larger organizations may face higher penalties.
Ridgewise Support
Ridgewise offers expertise to avoid these pitfalls. We manage bookkeeping and ensure accurate Form 990-EZ completion, helping individuals and businesses maintain compliance and avoid penalties.
Key Takeaways
- Form 990-EZ Overview: Form 990-EZ is a simplified version of IRS Form 990, designed for small to mid-sized nonprofits with gross receipts under $200,000 and total assets under $500,000.
- Filing Requirements: Nonprofits with receipts below $200,000 and assets under $500,000 must file Form 990-EZ. Smaller organizations with receipts under $50,000 may be required to file Form 990-N instead.
- Key Components: The form includes sections on identifying information, financial data, and other IRS filings. Accurate completion of these sections is essential for compliance.
- Common Mistakes: Common errors include incomplete or inaccurate entries and missed filing deadlines, which can result in penalties from the IRS.
- Ridgewise Assistance: Ridgewise offers expert help with filing Form 990-EZ, ensuring accuracy and compliance with nonprofit tax regulations.
Conclusion
Navigating the complexities of nonprofit accounting can be daunting but Ridgewise offers a specialized solution to ease this burden. By leveraging their expertise you can ensure that your Form 990-EZ is completed accurately and submitted on time. Avoid common pitfalls like incomplete entries and missed deadlines which can lead to costly penalties. Accurate financial details and timely submissions are crucial to staying compliant and avoiding IRS audits. Trusting Ridgewise with your nonprofit’s bookkeeping needs can help you maintain compliance and focus on your mission without the stress of accounting errors.