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The IRS 990-T form plays a crucial role for many tax-exempt organizations, serving as a key tool for reporting unrelated business income. It is essential for non-profits to understand that even while they are generally exempt from federal income tax, they may still be liable to pay taxes on earnings derived from activities not substantially related to their exempt purpose. This form allows these organizations to disclose such income and calculate any taxes owed. Moreover, it requires detailed information about the nature of the unrelated business activities and revenue generated, ensuring transparency and compliance with federal law. By filing the 990-T correctly, organizations protect their tax-exempt status and avoid penalties. Understanding the requirements, including the thresholds for reporting income and the deadlines for submission, can significantly impact an organization’s financial health and operational integrity.

IRS 990-T Example

Note: The form, instructions, or publication you are looking

for begins after this coversheet.

Please review the updated information below.

Reporting a Refundable Minimum Tax Credit on a 2018 or 2019 Form

990-T

A corporate 990-T filer who is completing Form 8827 and claiming a refundable minimum tax credit (line 5c (2019) or 8c (2018) of Form 8827) should report the credit on Form 990-T as follows.

On a 2018 Form 990-T, report the credit on line 50g, Other credits, adjustments, and payments. Check the “Other” box. Enter “F8827” and the amount of the credit.

On a 2019 Form 990-T, report the credit on line 51g, Other credits, adjustments, and payments. Check the “Other” box. Enter “F8827” and the amount of the credit.

Form 990-T

 

Exempt Organization Business Income Tax Return

OMB No. 1545-0047

 

 

 

 

 

 

 

 

(and proxy tax under section 6033(e))

 

 

2019

 

 

 

 

 

For calendar year 2019 or other tax year beginning

, 2019, and ending

, 20

.

Department of the Treasury

 

 

Go to www.irs.gov/Form990T for instructions and the latest information.

 

 

 

 

 

 

Open to Public Inspection for

Internal Revenue Service

Do not enter SSN numbers on this form as it may be made public if your organization is a 501(c)(3).

501(c)(3) Organizations Only

A

Check box if

 

 

 

Name of organization (

Check box if name changed and see instructions.)

 

D Employer identification number

address changed

 

 

 

 

 

 

 

 

 

 

 

 

(Employees’ trust, see instructions.)

B Exempt under section

Print

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

501(

) (

)

Number, street, and room or suite no. If a P.O. box, see instructions.

 

 

 

 

 

 

 

or

 

 

 

 

 

 

 

408(e)

 

220(e)

 

 

 

 

 

 

 

E Unrelated business activity code

 

 

 

Type

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(See instructions.)

 

 

 

408A

 

530(a)

 

 

City or town, state or province, country, and ZIP or foreign postal code

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

529(a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C Book value of all assets

F

Group exemption number (See instructions.)

 

 

 

 

 

 

 

 

 

at end of year

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

G

Check organization type

501(c) corporation

501(c) trust

401(a) trust

Other trust

 

 

 

 

 

H Enter the number

of the organization’s unrelated trades or businesses.

 

 

 

Describe the only (or first) unrelated

 

 

trade or business here

 

 

 

. If only one, complete Parts I–V. If more than one, describe the

 

 

first in the blank space at the end of the previous sentence, complete Parts I and II, complete a Schedule M for each additional

 

 

trade or business, then complete Parts III–V.

 

 

 

 

 

 

 

 

 

IDuring the tax year, was the corporation a subsidiary in an affiliated group or a parent-subsidiary controlled group? . . If “Yes,” enter the name and identifying number of the parent corporation.

Yes

No

J The books are in care of

 

 

Telephone number

 

Part

I

Unrelated Trade or Business Income

 

 

(A) Income

(B) Expenses

(C) Net

1a

Gross receipts or sales . .

 

 

 

 

 

 

b

Less returns and allowances

 

c Balance

1c

 

 

 

2

Cost of goods sold (Schedule A, line 7)

2

 

 

 

3

Gross profit. Subtract line 2 from line 1c

3

 

 

 

4a

Capital gain net income (attach Schedule D)

4a

 

 

 

b

Net gain (loss) (Form 4797, Part II, line 17) (attach Form 4797) .

4b

 

 

 

c

Capital loss deduction for trusts

4c

 

 

 

5

Income (loss) from a partnership or an S corporation (attach

 

 

 

 

 

statement)

5

 

 

 

6

Rent income (Schedule C)

6

 

 

 

7

Unrelated debt-financed income (Schedule E)

7

 

 

 

8

Interest, annuities, royalties, and rents from a controlled organization (Schedule F)

8

 

 

 

9

Investment income of a section 501(c)(7), (9), or (17) organization (Schedule G)

9

 

 

 

10

Exploited exempt activity income (Schedule I)

10

 

 

 

11

Advertising income (Schedule J)

11

 

 

 

12

Other income (See instructions; attach schedule)

12

 

 

 

13

Total. Combine lines 3 through 12

13

 

 

 

Part II Deductions Not Taken Elsewhere (See instructions for limitations on deductions.) (Deductions must be directly connected with the unrelated business income.)

14

Compensation of officers, directors, and trustees (Schedule K)

14

 

15

Salaries and wages

15

 

16

Repairs and maintenance

16

 

17

Bad debts

17

 

18

Interest (attach schedule) (see instructions)

18

 

19

Taxes and licenses

19

 

20

Depreciation (attach Form 4562)

20

 

 

 

21

Less depreciation claimed on Schedule A and elsewhere on return . . . .

21a

 

21b

 

22

Depletion

22

 

23

Contributions to deferred compensation plans

23

 

24

Employee benefit programs

24

 

25

Excess exempt expenses (Schedule I)

25

 

26

Excess readership costs (Schedule J)

26

 

27

Other deductions (attach schedule)

27

 

28

Total deductions. Add lines 14 through 27

28

 

29

Unrelated business taxable income before net operating loss deduction. Subtract line 28 from line 13

29

 

30

Deduction for net operating loss arising in tax years beginning on or after January 1, 2018 (see

 

 

 

instructions)

30

 

31

Unrelated business taxable income. Subtract line 30 from line 29

31

 

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 11291J

Form 990-T (2019)

Form 990-T (2019)

Page 2

Part III

Total Unrelated Business Taxable Income

 

32Total of unrelated business taxable income computed from all unrelated trades or businesses (see

 

instructions)

33

Amounts paid for disallowed fringes

34

Charitable contributions (see instructions for limitation rules)

35Total unrelated business taxable income before pre-2018 NOLs and specific deduction. Subtract line

34 from the sum of lines 32 and 33 . . . . . . . . . . . . . . . . . . . . . .

36Deduction for net operating loss arising in tax years beginning before January 1, 2018 (see

 

instructions)

37

Total of unrelated business taxable income before specific deduction. Subtract line 36 from line 35 .

38

Specific deduction (Generally $1,000, but see line 38 instructions for exceptions)

39Unrelated business taxable income. Subtract line 38 from line 37. If line 38 is greater than line 37, enter the smaller of zero or line 37 . . . . . . . . . . . . . . . . . . . . . . .

32

33

34

35

36

37

38

39

Part IV Tax Computation

40

Organizations Taxable as Corporations. Multiply line 39 by 21% (0.21)

41

Trusts Taxable at Trust

Rates. See instructions

for tax computation. Income tax on

 

the amount on line 39 from:

Tax rate schedule or

Schedule D (Form 1041)

42

Proxy tax. See instructions

43

Alternative minimum tax (trusts only)

44

Tax on Noncompliant Facility Income. See instructions

45

Total. Add lines 42, 43, and 44 to line 40 or 41, whichever applies

40

41

42

43

44

45

Part V Tax and Payments

46a

Foreign tax credit (corporations attach Form 1118; trusts attach Form 1116) .

46a

 

b

Other credits (see instructions)

46b

 

c

General business credit. Attach Form 3800 (see instructions)

46c

 

d

Credit for prior year minimum tax (attach Form 8801 or 8827)

46d

 

e

Total credits. Add lines 46a through 46d

47

Subtract line 46e from line 45

48

Other taxes. Check if from:

Form 4255

Form 8611

Form 8697

Form 8866

Other (attach schedule)

49

Total tax. Add lines 47 and 48 (see instructions)

502019 net 965 tax liability paid from Form 965-A or Form 965-B, Part II, column (k), line 3 . . . . .

51a

Payments: A 2018 overpayment credited to 2019

51a

 

b

2019 estimated tax payments

51b

 

c

Tax deposited with Form 8868

51c

 

d

Foreign organizations: Tax paid or withheld at source (see instructions) . .

51d

 

e

Backup withholding (see instructions)

51e

 

f

Credit for small employer health insurance premiums (attach Form 8941) . .

51f

 

g

Other credits, adjustments, and payments:

Form 2439

 

 

 

 

 

Form 4136

 

Other

 

 

 

Total

51g

 

52

Total payments. Add lines 51a through 51g

53

Estimated tax penalty (see instructions). Check if Form 2220 is attached

54

Tax due. If line 52 is less than the total of lines 49, 50, and 53, enter amount owed

55Overpayment. If line 52 is larger than the total of lines 49, 50, and 53, enter amount overpaid . .

56 Enter the amount of line 55 you want: Credited to 2020 estimated tax

Refunded

46e

47

48

49

50

52

53

54

55

56

Part VI Statements Regarding Certain Activities and Other Information (see instructions)

57At any time during the 2019 calendar year, did the organization have an interest in or a signature or other authority over a financial account (bank, securities, or other) in a foreign country? If “Yes,” the organization may have to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts. If “Yes,” enter the name of the foreign country here

58During the tax year, did the organization receive a distribution from, or was it the grantor of, or transferor to, a foreign trust? .

If “Yes,” see instructions for other forms the organization may have to file.

 

59 Enter the amount of tax-exempt interest received or accrued during the tax year

$

Yes No

Sign Here

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

F

 

F

 

May the IRS discuss this return

 

 

 

 

 

 

 

 

 

 

with the preparer shown below

 

 

 

 

 

(see instructions)? Yes No

 

Signature of officer

Date

 

Title

Paid

Print/Type preparer’s name

Preparer’s signature

Date

Check

if

PTIN

 

 

 

 

Preparer

 

 

 

self-employed

 

 

 

 

 

 

 

Firm’s name

 

 

Firm’s EIN

 

 

Use Only

 

 

 

 

Firm’s address

 

 

Phone no.

 

 

 

 

 

 

 

Form 990-T (2019)

Form 990-T (2019)

Page 3

Schedule A—Cost of Goods Sold. Enter method of inventory valuation

 

1Inventory at beginning of year

2

Purchases

3Cost of labor . . . . . .

4a Additional section 263A costs

(attach schedule) . . . .

bOther costs (attach schedule)

5 Total. Add lines 1 through 4b

1

2

3

4a

4b

5

6 Inventory at end of year . . . .

6

7Cost of goods sold. Subtract line 6 from line 5. Enter here and in Part

I, line 2

7

8Do the rules of section 263A (with respect to Yes No

property produced or acquired for resale) apply to the organization? . . . . . . . . .

Schedule C—Rent Income (From Real Property and Personal Property Leased With Real Property)

(see instructions)

1.Description of property

(1)

(2)

(3)

(4)

2.Rent received or accrued

(a) From personal property (if the percentage of rent

(b) From real and personal property (if the

 

 

3(a) Deductions directly connected with the income

for personal property is more than 10% but not

percentage of rent for personal property exceeds

 

in columns 2(a) and 2(b) (attach schedule)

more than 50%)

 

50% or if the rent is based on profit or income)

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

 

 

 

 

(2)

 

 

 

 

 

 

 

(3)

 

 

 

 

 

 

 

(4)

 

 

 

 

 

 

 

Total

 

Total

 

 

 

(b) Total deductions.

 

(c) Total income. Add totals of columns 2(a) and 2(b). Enter

 

 

 

 

 

 

 

Enter here and on page 1,

here and on page 1, Part I, line 6, column (A) . . .

 

 

 

Part I, line 6, column (B)

 

Schedule E—Unrelated Debt-Financed Income (see instructions)

 

 

 

 

 

 

 

2. Gross income from or

 

3. Deductions directly connected with or allocable to

1. Description of debt-financed property

 

debt-financed property

allocable to debt-financed

 

 

 

 

 

 

 

property

 

(a) Straight line depreciation

(b) Other deductions

 

 

 

 

 

(attach schedule)

(attach schedule)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

 

 

 

 

(2)

 

 

 

 

 

 

 

(3)

 

 

 

 

 

 

 

(4)

 

 

 

 

 

 

 

4. Amount of average

5. Average adjusted basis

6. Column

 

 

7. Gross income reportable

8. Allocable deductions

acquisition debt on or

of or allocable to

 

 

4 divided

 

 

(column 6 × total of columns

allocable to debt-financed

debt-financed property

 

 

(column 2 × column 6)

by column 5

 

 

3(a) and 3(b))

property (attach schedule)

(attach schedule)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

%

 

 

 

(2)

 

 

 

%

 

 

 

(3)

 

 

 

%

 

 

 

(4)

 

 

 

%

 

 

 

 

 

 

 

 

Enter here and on page 1,

Enter here and on page 1,

 

 

 

 

 

Part I, line 7, column (A).

Part I, line 7, column (B).

Totals

 

 

 

 

Total dividends-received deductions included in column 8

 

 

 

 

 

 

 

 

Form 990-T (2019)

Form 990-T (2019)

 

 

 

 

Page 4

Schedule F—Interest, Annuities, Royalties, and Rents From Controlled Organizations (see instructions)

 

 

Exempt Controlled Organizations

 

 

1. Name of controlled

2. Employer

4. Total of specified

5. Part of column 4 that is

6. Deductions directly

organization

identification number 3. Net unrelated income

included in the controlling

connected with income

 

 

(loss) (see instructions)

payments made

 

 

organization’s gross income

in column 5

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

 

 

(2)

 

 

 

 

 

(3)

 

 

 

 

 

(4)

Nonexempt Controlled Organizations

7.

Taxable Income

8. Net unrelated income

9.

Total of specified

10. Part of column 9 that is

11. Deductions directly

included in the controlling

connected with income in

(loss) (see instructions)

payments made

 

 

organization’s gross income

column 10

 

 

 

 

 

(1)

(2)

(3)

(4)

Add columns 5 and 10.

Add columns 6 and 11.

Enter here and on page 1,

Enter here and on page 1,

Part I, line 8, column (A).

Part I, line 8, column (B).

Totals . . . . . . . . . . . . . . . . . . . . . . . . .

Schedule G—Investment Income of a Section 501(c)(7), (9), or (17) Organization (see instructions)

1. Description of income

2. Amount of income

3. Deductions

4.

Set-asides

5. Total deductions

directly connected

and set-asides (col. 3

(attach schedule)

 

 

(attach schedule)

plus col. 4)

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

 

 

(2)

 

 

 

 

 

(3)

 

 

 

 

 

(4)

 

 

 

 

 

 

Enter here and on page 1,

 

 

 

Enter here and on page 1,

 

Part I, line 9, column (A).

 

 

 

Part I, line 9, column (B).

Totals . . . . . . . .

Schedule I—Exploited Exempt Activity Income, Other Than Advertising Income (see instructions)

 

2. Gross

3. Expenses

4. Net income (loss)

5. Gross income

 

 

7. Excess exempt

 

directly

from unrelated trade

6.

Expenses

expenses

 

unrelated

1. Description of exploited activity

connected with

or business (column

from activity that

(column 6 minus

business income

attributable to

production of

2 minus column 3).

is not unrelated

column 5, but not

 

from trade or

column 5

 

unrelated

If a gain, compute

business income

more than

 

business

 

 

 

business income

cols. 5 through 7.

 

 

 

column 4).

 

 

 

 

 

(1)

(2)

(3)

(4)

Enter here and on

Enter here and on

Enter here and

page 1, Part I,

page 1, Part I,

on page 1,

line 10, col. (A).

line 10, col. (B).

Part II, line 25.

Totals . . . . . . . .

Schedule J—Advertising Income (see instructions)

Part I Income From Periodicals Reported on a Consolidated Basis

 

2. Gross

 

 

4. Advertising

 

 

 

7. Excess readership

1. Name of periodical

3.

Direct

gain or (loss) (col.

5. Circulation

6.

Readership

costs (column 6

advertising

2 minus col. 3). If

minus column 5, but

advertising costs

income

 

costs

 

income

a gain, compute

 

not more than

 

 

 

 

 

 

 

 

 

 

cols. 5 through 7.

 

 

 

column 4).

(1)

(2)

(3)

(4)

Totals (carry to Part II, line (5))

.

Form 990-T (2019)

Form 990-T (2019)

Page 5

Part II Income From Periodicals Reported on a Separate Basis (For each periodical listed in Part II, fill in columns

2 through 7 on a line-by-line basis.)

 

 

2. Gross

 

 

4. Advertising

 

 

 

 

 

 

7. Excess readership

1. Name of periodical

3. Direct

 

gain or (loss) (col.

5. Circulation

 

6.

Readership

 

costs (column 6

advertising

 

2 minus col. 3). If

 

 

minus column 5, but

advertising costs

 

 

income

 

 

costs

 

 

 

income

 

a gain, compute

 

 

 

 

not more than

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

cols. 5 through 7.

 

 

 

 

 

 

column 4).

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

 

 

 

 

 

 

 

 

 

 

 

Totals from Part I.

. . . . .

 

 

 

 

 

 

 

 

 

 

 

 

 

Enter here and on

Enter here and on

 

 

 

 

 

 

 

 

Enter here and

 

 

page 1, Part I,

page 1, Part I,

 

 

 

 

 

 

 

 

on page 1,

 

 

line 11, col. (A).

line 11, col. (B).

 

 

 

 

 

 

 

 

Part II, line 26.

Totals, Part II (lines 1–5) . . . .

 

 

 

 

 

 

 

 

 

 

 

Schedule K—Compensation of

Officers, Directors, and Trustees (see instructions)

 

 

 

 

 

1. Name

 

 

2. Title

 

3. Percent of

 

4. Compensation attributable to

 

 

 

 

time devoted to

 

 

 

 

 

 

unrelated business

 

 

 

 

 

 

 

business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

 

 

 

%

 

 

 

 

(2)

 

 

 

 

 

 

%

 

 

 

 

(3)

 

 

 

 

 

 

%

 

 

 

 

(4)

 

 

 

 

 

 

%

 

 

 

 

Total. Enter here and on page 1, Part II, line 14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Form 990-T (2019)

File Breakdown

Fact Name Description
Purpose The IRS Form 990-T is used by tax-exempt organizations to report unrelated business income.
Threshold Organizations must file this form if their gross unrelated business income exceeds $1,000.
Filing Deadline The deadline for filing the 990-T is typically the 15th day of the fifth month after the end of the organization’s tax year.
State Forms Some states require additional forms for unrelated business income reporting, governed by state tax laws.
Tax Rate The income reported is subject to corporate tax rates, which can vary depending on the amount earned.
Form Variations The IRS provides multiple versions of Form 990-T to accommodate different types of organizations and income types.
Penalties Late filing or noncompliance can result in significant penalties for organizations that fail to submit Form 990-T.

Guide to Using IRS 990-T

Filling out the IRS 990-T form requires attention to detail and accurate reporting of income generated by tax-exempt organizations. Completing this form properly contributes to compliance with federal tax regulations, ensuring that any unrelated business income is accounted for correctly.

  1. Obtain the IRS 990-T form from the IRS website or authorized distribution channels.
  2. Start with Part I, where you will report the organization's unrelated business income. Enter gross income from each unrelated business activity.
  3. Deduct allowable expenses related to generating the unrelated business income in Part II. This may include costs directly associated with these activities.
  4. Transfer the net income amounts to Part III. Here, calculate the total unrelated business taxable income.
  5. Complete Part IV if applicable. This section requests information about specific operational details of unrelated business activities.
  6. Provide any relevant schedules or attachments that may support the reported income and expenses. Make sure all calculations are clear and accurate.
  7. Fill out Part V if the organization has any specific tax information or requirements that may need to be disclosed.
  8. Review all the completed sections to ensure accuracy. Double-check figures and verify completed entries.
  9. Sign and date the form at the bottom. An authorized person from the organization must sign it.
  10. Submit the completed form to the IRS, ensuring it is sent on time to avoid any penalties.

Get Answers on IRS 990-T

What is the IRS 990-T form?

The IRS 990-T form, officially known as the Exempt Organization Business Income Tax Return, is used by certain tax-exempt organizations to report income generated from activities that are not related to their exempt purpose. This form is crucial for non-profits that may engage in business activities, as it helps to determine if they owe tax on unrelated business income (UBI). Organizations like charities, universities, and other non-profit entities use this form when their UBI exceeds $1,000 in a tax year.

Who must file Form 990-T?

Various types of tax-exempt organizations are required to file Form 990-T. These include:

  1. Charitable Organizations
  2. Religious Organizations
  3. Social Welfare Organizations
  4. Moderate Hobby Groups

Organizations that earn unrelated business income over $1,000 must file. If an organization fails to file, it could face penalties, including the risk of losing its tax-exempt status. It is essential to evaluate all income sources to determine if filing is necessary.

What constitutes unrelated business income?

Unrelated business income is defined as income from a trade or business that is regularly carried on and not substantially related to the organization's exempt purpose. Examples include:

  • Income from selling products unrelated to the organization's activities.
  • Rents received from real property that is not used in the organization's exempt work.
  • Advertising income from a publication that does not further the exempt purposes.

Essentially, if the income-generating activity does not directly contribute to the organization's mission, it's likely categorized as UBI. Understanding this distinction is crucial for compliance.

What are the filing deadlines for Form 990-T?

The filing deadlines for Form 990-T generally coincide with the organization's tax year. Most organizations have to file by the 15th day of the 5th month after the close of their tax year. For organizations that follow a calendar year, the deadline is typically May 15. Extensions can be requested using Form 8868, allowing an additional six months for submission. However, international or specific filing situations may have different deadlines. Organizations should stay vigilant regarding these dates to avoid penalties.

Common mistakes

Filling out the IRS 990-T form can be a daunting task, and mistakes can lead to complications down the line. One common error is providing inaccurate information. Many taxpayers rush through the process and inadvertently enter the wrong figures, which can trigger audits or result in penalties. It's crucial to double-check all amounts before submitting the form.

Another frequent mistake involves neglecting to include all unrelated business income. Organizations may overlook certain revenue streams, believing they don't apply, but any income not directly related to the organization’s primary purpose must be reported. Failing to include this can lead to discrepancies with the IRS.

Many people also falter when calculating expenses. There’s a tendency to either exaggerate these costs or overlook applicable deductions entirely. It’s vital to go through each expense, ensuring that everything adheres to IRS guidelines. Underreporting can lead to overtaxation, while overreporting may solve nothing and raise red flags.

Another common pitfall is missing important deadlines. The 990-T form has strict deadlines, and late submissions can incur penalties. Creating a calendar of due dates can help keep track of when forms need to be submitted.

Inadequate documentation can also be a significant issue. Failing to keep proper records supporting the reported income and expenses can lead to complications during an audit. Always maintain detailed receipts and statements to justify your entries on the form.

Some individuals mistakenly believe that federal guidelines are the only consideration. Many states have their own requirements for filing taxes, which can be easily overlooked. Failing to comply with state regulations might result in fines or additional scrutiny.

Furthermore, there is a tendency to overlook changes in tax laws. Tax laws can shift frequently, affecting exemptions and deductions. Staying informed about these changes ensures compliance and can minimize tax liability.

Lastly, many people do not seek professional assistance when necessary. Consulting with a tax professional can provide clarity and reduce the likelihood of errors. With the complexities of tax regulations, having expert guidance can be a lifesaver.

Documents used along the form

The IRS 990-T form is filed by tax-exempt organizations to report unrelated business income. However, several other forms and documents are often necessary to complete the tax filing process fully or to provide additional information. Below is a list of these commonly associated forms and documents that may aid in the submission and compliance requirements. Each item is described briefly for ease of understanding.

  • IRS Form 990: This serves as the primary tax form for tax-exempt organizations, detailing their financial information, governance, and activities in a comprehensive manner.
  • IRS Form 990-EZ: A simplified version of Form 990, this form is designed for smaller organizations that meet specific criteria, allowing them to report their financial information in a less detailed format.
  • IRS Form 990-PF: Used by private foundations, this form provides information about the foundation’s assets, income, and distributions, ensuring compliance with tax regulations.
  • IRS Form 4562: This form is necessary for organizations claiming depreciation or other deductions regarding assets, helping clarify the financial overview for the IRS.
  • IRS Form 8868: Organizations needing an extension of time to file IRS 990, 990-EZ, or 990-PF use this form, allowing them to manage their tax responsibilities more effectively.
  • Schedule A (Form 990): This schedule supports the core Form 990 by providing information about the organization’s public charity status and fundraising practices.
  • Schedule B (Form 990): Organizations report their major donors on this schedule, allowing the IRS to understand the funding sources and potential influences on operations.
  • Schedule C (Form 990): Used to address lobbying and political expenditures, this schedule helps keep tax-exempt entities accountable for their engagement in political activities.
  • Bylaws: Most organizations maintain a set of bylaws, which outline governance structures and operational procedures. While not filed with the IRS, they are crucial for internal management and compliance.
  • Organization's Articles of Incorporation: This document formally establishes the organization’s existence in a state and outlines its purpose. It’s essential for legal recognition and can be requested for tax filings.

Utilizing these forms and documents alongside the IRS 990-T can provide a clearer financial picture for both the organization and the IRS. Properly managing these documents ensures that organizations maintain compliance while benefiting from their tax-exempt status. Each item has its own purpose and significance, contributing to a thorough understanding of nonprofit financial obligations.

Similar forms

  • IRS Form 990: This is the annual information return that tax-exempt organizations, charities, and nonprofits must file. Like Form 990-T, which focuses on unrelated business income, Form 990 provides details about an organization’s finances, governance, programs, and compliance with tax laws. Both forms aim to ensure transparency and accountability to the public.

  • IRS Form 1040: This is the standard individual income tax return form that many Americans must file. While Form 1040 relates to personal income, it, too, addresses taxable income. Form 990-T parallels this in that it addresses how tax-exempt entities report their unrelated business income, mirroring individuals reporting their earnings.

  • IRS Form 1120: Corporations use this return to report income, gains, losses, deductions, and credits. Similar to Form 990-T, which assesses the tax obligations of nonprofit organizations involved in a business activity, Form 1120 serves to declare and tax corporate income, highlighting the nature of business taxation in both contexts.

  • IRS Form 1065: Partnerships file this form to report their income, deductions, profits, and losses. Like the 990-T form, which addresses business activities for nonprofits, Form 1065 indicates how collective income generated by partnerships is treated for tax purposes. Both forms emphasize the importance of reporting income derived from business ventures.

Dos and Don'ts

When completing the IRS 990-T form, there are important guidelines to follow. Here are five do’s and don’ts to consider:

  • Do ensure that all income and expenses are accurately reported.
  • Do double-check all calculations before submitting.
  • Do file the form on time to avoid penalties.
  • Don’t ignore IRS instructions or guidance specific to the form.
  • Don’t leave any fields blank; if a question does not apply, write “N/A” instead.

Misconceptions

The IRS Form 990-T is often misunderstood. Here are eight common misconceptions regarding this form, along with clear explanations to clarify each one.

  • Only charitable organizations need to file Form 990-T. Many individuals mistakenly believe that only 501(c)(3) organizations must file this form. In reality, any tax-exempt organization that generates unrelated business income may need to file.
  • Form 990-T is irrelevant for small organizations. Some think that if a tax-exempt organization has relatively small income, it does not need to worry about filing. However, even minimal unrelated business income could trigger the requirement to file.
  • Filing Form 990-T means losing tax-exempt status. There's a belief that filing this form results in loss of tax exemption. In truth, it's a part of compliance; filing does not jeopardize the tax-exempt status as long as the organization adheres to IRS regulations.
  • Only profits from operating a business require a Form 990-T. Individuals often assume that any business income is automatically taxable. Yet, even passive income streams, like dividends or interest related to a tax-exempt entity, can be subject to unrelated business income tax.
  • Form 990-T only applies to large non-profits. Many believe that only large non-profits with significant income need to file this form. However, all eligible entities with unrelated business income must consider their filing obligations, regardless of size.
  • Filing is only necessary if the income is considered very high. Some organizations think they can disregard filing if the unrelated business income is below a certain threshold. The requirement to file Form 990-T applies as soon as there is any unrelated business income.
  • The form is only required for specific types of income. A common misconception is that only specific income types, like sales revenue, trigger the need for Form 990-T. However, virtually any income derived from a trade or business activity that isn’t substantially related to the organization’s exempt purpose could necessitate a filing.
  • Filing Form 990-T is optional. Some entities believe that submitting Form 990-T is merely an option for compliance. In fact, it is mandatory for those subject to the unrelated business income tax, and failure to file can carry penalties.

Understanding these misconceptions can help organizations better navigate their tax responsibilities related to Form 990-T and avoid potential pitfalls.

Key takeaways

Here are important points to consider when filling out and using the IRS 990-T form:

  1. Understand the Purpose: The IRS 990-T form is used by tax-exempt organizations to report unrelated business income and pay any applicable tax.
  2. Familiarize Yourself with Unrelated Business Income: This includes income from activities not substantially related to the organization's exempt purpose.
  3. Be Aware of the Filing Threshold: Organizations must file if they earn $1,000 or more in unrelated business income during the tax year.
  4. Gather All Required Information: Prior to filling out the form, collect financial records, including income statements and expenses related to unrelated business activities.
  5. Complete the Necessary Sections: Fill out the income section accurately and detail the expenses associated with generating that income.
  6. Consider Joint Ventures Carefully: Income from joint ventures may need to be reported, especially if they stray from your organization’s main mission.
  7. List All Applicable Deductions: Certain deductions can reduce the taxable amount, so make sure to claim all that apply.
  8. Deadlines Matter: The form is typically due on the 15th day of the 5th month after the end of the organization’s tax year.
  9. Electronic Filing is Available: Organizations may file electronically to streamline the process and receive confirmation of submission.
  10. Seek Professional Help if Needed: Consulting with a tax professional can help ensure compliance and accuracy.