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When navigating the world of nonprofit organizations, understanding the various forms required by the IRS is crucial for compliance and transparency. Among these, Schedule O of Form 990 or 990-EZ plays a significant role. This supplemental schedule provides essential narrative descriptions that expand upon the financial information reported in the main forms. Organizations use Schedule O to detail their mission, accomplishments, and programmatic activities, which helps stakeholders gain a clearer understanding of their work. By addressing questions regarding governance, policies, and operational challenges, nonprofits can illustrate their commitment to accountability. Moreover, Schedule O allows organizations to communicate any specific circumstances that may impact their financial reports or operational status, making it an invaluable tool for enhancing public trust and fostering stronger relationships with donors and the community. As nonprofits prepare to file, understanding the nuances of this schedule can help ensure that their story is told effectively and comprehensively.
IRS Schedule O 990 or 990-EZ Example
SCHEDULE O |
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Supplemental Information to Form 990 or |
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OMB No. |
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(Form 990 or |
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Complete to provide information for responses to specific questions on |
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2020 |
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Form 990 or |
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Department of the Treasury |
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Attach to Form 990 or |
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Open to Public |
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Internal Revenue Service |
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Go to www.irs.gov/Form990 for the latest information. |
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Inspection |
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Name of the organization |
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Employer identification number |
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For Paperwork Reduction Act Notice, see the Instructions for Form 990 or |
Cat. No. 51056K |
Schedule O (Form 990 or |
Schedule O (Form 990 or
Name of the organization
Page 2
Employer identification number
Schedule O (Form 990 or
Schedule O (Form 990 or |
Page 3 |
General Instructions
Section references are to the Internal Revenue Code unless otherwise noted.
Future developments. For the latest information about developments related to Schedule O (Form 990 or
Purpose of Schedule
An organization should use Schedule O (Form 990 or
Don’t use Schedule O to supplement responses to questions in other schedules of the Form 990 or
Who Must File
All organizations that file Form 990 and certain organizations that file Form
19.If an organization isn’t required to file Form 990 or
Specific Instructions
Use as many continuation sheets of Schedule O (Form 990 or
Complete the required information on the appropriate line of Form 990 or
Identify clearly the specific part and line(s) of Form 990 or
Late return. If the return isn’t filed by the due date (including any extension granted), attach a separate statement giving the reasons for not filing on time. Don’t use this schedule to provide the
Amended return. If the organization checked the Amended return box on Form 990, Heading, item B, or Form
990 or
Group return. If the organization answered “Yes” to Form 990, line H(a), but “No” to line H(b), use a separate
attachment to list the name, address, and EIN of each affiliated organization included in the group return. Don’t use this schedule. See the instructions for Form 990, I. Group Return.
Form 990, Parts III, V, VI, VII, IX, XI, and XII. Use Schedule O (Form 990 or
1.Part III, Statement of Program Service Accomplishments.
a.“Yes” response to line 2.
b.“Yes” response to line 3.
c.Other program services on line 4d.
2.Part V, Statements Regarding Other IRS Filings and Tax Compliance.
a.“No” response to line 3b.
b.“Yes” or “No” response to line 13a.
c.“No” response to line 14b.
3.Part VI, Governance, Management, and Disclosure.
a.Material differences in voting rights among members of the governing body in line 1a.
b.Delegation of governing board’s authority to executive committee in line 1a.
c.“Yes” responses to lines 2 through
7b.
d.“No” responses to lines 8a, 8b, and
10b.
e.“Yes” response to line 9.
f.Description of process for review of Form 990, if any, in response to line 11b.
g.“Yes” response to line 12c.
h.Description of process for determining compensation, in response to lines 15a and 15b.
i.If applicable, in response to line 18, an explanation as to why the organization checked the Other box or didn’t make any of Forms 1023, 1024,
j.Description of public disclosure of documents, in response to line 19.
4.Part VII, Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors.
a.Explain if reporting of compensation paid by a related organization is provided only for the period during which the related organization was related, not the entire calendar year ending with or within the tax year, and state the period during which the related organization was related.
b.Description of reasonable efforts undertaken to obtain information on compensation paid by related organizations, if the organization is unable to obtain such information to report in column (E).
5.Explanation for Part IX, Statement of Functional Expenses, line 11g (other fees
for services), including the type and amount of each expense included in line 11g, if the amount in Part IX, line 11g, exceeds 10% of the amount in Part IX, line 25 (total functional expenses).
6.Explanation for Part IX, Statement of Functional Expenses, line 24e (all other expenses), including the type and amount of each expense included in line 24e, if the amount on line 24e exceeds 10% of the amount in Part IX, line 25 (total functional expenses).
7.Part XI, Reconciliation of Net Assets. Explain any other changes in net assets or fund balances reported on line 9.
8.Part XII, Financial Statements and Reporting.
a.Change in accounting method or description of other accounting method used on line 1.
b.Change in committee oversight review from prior year on line 2c.
c.“No” response to line 3b.
Form
1.Part I, Revenue, Expenses, and Changes in Net Assets or Fund Balances.
a.Description of other revenue, in response to line 8.
b.List of grants and similar amounts paid, in response to line 10.
c.Description of other expenses, in response to line 16.
d.Explanation of other changes in net assets or fund balances, in response to line 20.
2.Part II, Balance Sheets.
a.Description of other assets, in response to line 24.
b.Description of total liabilities, in response to line 26.
3.Description of other program services, in response to Part III, Statement of Program Service Accomplishments, line 31.
4.Part V, Other Information.
a.“Yes” response to line 33.
b.“Yes” response to line 34.
c.Explanation of why organization didn’t report unrelated business gross income of $1,000 or more to the IRS on Form
d.“No” response to line 44d.
Other. Use Schedule O (Form 990 or
Don’t include on Schedule O F! (Form 990 or
security number(s), because this CAUTION schedule will be made available for public inspection.
File Breakdown
| Fact Name | Description |
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| Purpose of the Form | The IRS Schedule O is used by nonprofits to provide additional information regarding their operations, governance, and the financial activities outlined in Form 990 or 990-EZ. |
| Filing Requirement | Organizations that file Form 990 or 990-EZ must complete Schedule O if they have specific disclosures or additional explanations to provide regarding their activities. |
| Usage | This schedule serves to clarify certain aspects of a nonprofit's financial statements, enhancing transparency and understanding for stakeholders and the general public. |
| State-Specific Laws | Depending on the state, additional forms or disclosures may be required under laws such as the California Revenue and Taxation Code or the New York Not-For-Profit Corporation Law. |
Guide to Using IRS Schedule O 990 or 990-EZ
Filling out the IRS Schedule O 990 or 990-EZ form is critical for your organization’s compliance with federal tax regulations. Ensure accuracy to avoid complications.
- Gather necessary documents, including your organization’s financial records, bylaws, and previous years' tax returns.
- Start with the basic information section, including your organization’s name, address, and Employer Identification Number (EIN).
- Review the 990 or 990-EZ form sections carefully and determine which sections are applicable to your organization.
- Fill in financial data accurately, including revenue, expenses, net assets, and any specific deductions that apply to your organization.
- Enter information about your organization’s mission, programs, and significant changes during the year.
- Include any narrative details that highlight how your organization meets its goals. This is the purpose of Schedule O.
- Double-check all entries for accuracy. Verify numbers and ensure that you have answered all required questions.
- Sign and date the form, including the title of the signing officer, and ensure that all required schedules are attached.
- Submit the completed form to the IRS by the due date, either electronically or via mail, depending on your organization’s filing requirements.
After submission, retain a copy of the completed form for your records. Monitor for any communications from the IRS regarding your filing and be prepared to respond promptly if needed.
Get Answers on IRS Schedule O 990 or 990-EZ
What is IRS Schedule O?
Schedule O is a specific attachment to Forms 990 and 990-EZ, which are tax forms used by organizations exempt from income tax in the United States. This form allows organizations to provide additional information regarding their tax-exempt status and operations. Essentially, it helps to clarify the organization’s activities, governance, and any significant changes that may have occurred during the year.
Who needs to file Schedule O?
Not all organizations are required to file Schedule O. It is generally necessary for those that file Form 990 or 990-EZ, particularly if they need to explain certain information that these forms don’t cover in detail. Nonprofits are encouraged to use this schedule to provide context and transparency about their operations to the IRS and the public.
What kind of information is required on Schedule O?
Schedule O typically requires information related to:
- The organization’s mission and the programs it undertakes.
- Any new policies that have been adopted.
- Changes in leadership or board composition.
- Amendments to bylaws or articles of incorporation.
- Any major changes in operations or structure.
This section allows nonprofits to elaborate on key aspects that may not be immediately apparent in the basic forms.
How does one complete Schedule O?
Completing Schedule O is straightforward. Organizations should refer to their records and draft a narrative that addresses the required areas. Keep in mind that the information should be clear and concise. When filling out the schedule, organizations must ensure that the relevant sections are completed and that the information aligns with what is reported on Form 990 or 990-EZ.
Is there a deadline for filing Schedule O?
Yes, the filing deadline for Schedule O aligns with that of Form 990 or 990-EZ. Generally, organizations must file these forms by the 15th day of the 5th month after the end of their fiscal year. So, for organizations with a fiscal year ending December 31, the deadline would be May 15 of the following year. Extensions may be applied for but must be filed before the original due date.
What happens if Schedule O is not filed?
Failing to file Schedule O when required may lead to complications. The IRS may not have the complete picture of the organization’s activities, which can result in penalties or issues with maintaining tax-exempt status. Furthermore, it may affect the trust of donors and the public, who rely on transparent reporting for accountability.
Common mistakes
Filling out the IRS Schedule O 990 or 990-EZ form can be tricky. One common mistake is not providing enough detail. When describing your organization and its activities, it’s important to give a clear picture. Vague descriptions can lead to confusion and may raise red flags during reviews.
Another frequent error is failing to report all income. Some people overlook smaller streams of revenue or assume they don’t need to include certain amounts. Every dollar counts, and accurate reporting is crucial to avoid penalties later. Full transparency helps maintain the trust of the IRS.
Omitting required schedules is also a prevalent issue. The 990 and 990-EZ forms often have related schedules that provide additional context. Skipping these schedules can lead to an incomplete submission, making it vital to double-check what's required for your specific situation.
Additionally, many individuals forget to sign and date the form. While it may seem like a minor oversight, an unsigned form is considered invalid. Whether it’s a volunteer or an officer, ensuring the right person completes this step is essential.
Not keeping accurate records during the entire year is another mistake. Proper documentation supports the figures reported on the form. Inadequate records can lead to inaccuracies that complicate the review process. It’s wise to keep everything organized to facilitate easier reporting.
Finally, misunderstanding the deadlines or failing to file on time can have serious consequences. Organizations can incur penalties if they miss important dates. Staying informed about filing deadlines needs to be a priority to avoid unnecessary stress and fees.
Documents used along the form
When filing the IRS Schedule O (Form 990 or 990-EZ), there are several other forms and documents you may need to include. These documents support your organization’s financial reporting and provide crucial information for compliance. Here’s a quick overview of some key forms:
- IRS Form 990: This is the main tax form used by tax-exempt organizations to report their income, expenses, and activities. It provides detailed information to the IRS and the public about the organization's mission, programs, and financial status.
- IRS Form 990-EZ: This is a shorter version of Form 990, designed for smaller organizations with less complex financial activities. It still requires comprehensive information but is less detailed than the standard Form 990.
- IRS Form 990-T: If your organization has unrelated business income, this form is necessary. It calculates the tax owed on income not related to the exempt purpose of the organization.
- Schedule A: This schedule provides information about public charity status and public support for the organization. It helps demonstrate the organization meets the requirements for tax exemption.
- Schedule B: This schedule details contributions and grants received, including donor information. It is essential for transparency and accountability regarding financial support.
- Schedule D: This schedule summarizes the organization's financial statements, including details on net assets and any financial policies or practices in place.
Filing these forms accurately is vital for maintaining your organization’s tax-exempt status and ensuring compliance with IRS regulations. Familiarize yourself with each document to ensure your submissions are complete and informative.
Similar forms
The IRS Schedule O 990 or 990-EZ form is used by organizations to provide additional information about their operations and to explain their finances to the IRS. Several other documents share similarities with this form. Here are four that are often compared:
- Form 990: Like Schedule O, this form is filed annually by tax-exempt organizations. Both documents require organizations to disclose financial information and explain their activities to maintain transparency.
- Form 1023: This is the application for recognition of exemption under Section 501(c)(3) of the Internal Revenue Code. Similar to Schedule O, Form 1023 includes details about the organization's purpose, activities, and governance structure.
- Form 990-PF: This form is specifically for private foundations. It also requires financial reporting and information about the foundation’s activities, similar to the disclosures made in Schedule O.
- Form 941: Although it focuses on payroll taxes, Form 941 requires employers to report their quarterly payroll and related tax information. Both forms aim to provide necessary financial data, though they serve different purposes within the tax landscape.
Dos and Don'ts
When filling out the IRS Schedule O for Form 990 or 990-EZ, accuracy and clarity are vital. Here are some essential do's and don'ts to keep in mind.
- Do provide clear and concise information. Keep your descriptions straightforward to ensure that readers can easily understand your organization’s mission and activities.
- Do ensure that all required information is included. Double-check to confirm that you have answered all questions and provided the necessary details specific to your organization.
- Do keep your language professional but approachable. This helps convey your message while making the form more engaging.
- Do review your form before submission. Errors can lead to delays or issues with your filing status, so take the time to proofread.
- Don't use jargon or overly complex language. This can confuse the reader and detract from the intended message.
- Don't leave any sections blank unless instructed. Omitting information can result in complications or the need for follow-up.
- Don't exaggerate or minimize your achievements or activities. Honesty in reporting ensures credibility and builds trust.
- Don't rush through the process. Take all the time you need to ensure the accuracy and completeness of the document.
Misconceptions
Understanding the IRS Schedule O, associated with Forms 990 and 990-EZ, can prevent confusion and ensure accurate reporting for tax-exempt organizations. Here are seven common misconceptions regarding this form:
- Schedule O is optional for all organizations. Many believe that Schedule O is not necessary; however, it is required for explaining the organization's mission, accomplishments, and governance structure when filing Forms 990 and 990-EZ.
- Only large organizations need to complete Schedule O. This is inaccurate. Any tax-exempt organization that files a 990 or 990-EZ must provide a Schedule O, regardless of size.
- Schedule O is only for financial reporting. While financial information is included in other parts of the form, Schedule O primarily focuses on narrative descriptions, such as program activities and governance policies.
- The Schedule O form is the same for both 990 and 990-EZ filers. This is misleading. While the purpose remains similar, the content may differ based on the organization’s specific circumstances, size, and activities.
- Completing Schedule O can reduce tax liability. Schedule O does not influence tax calculations directly. It serves to provide transparency and compliance with IRS requirements rather than impacting tax obligations.
- Answers provided on Schedule O are confidential. Information on Schedule O becomes part of public records once filed. Thus, transparency is essential as anyone can request access to this data.
- Only the executive director needs to complete Schedule O. In reality, collaboration among board members and key staff can result in a more comprehensive and accurate representation of the organization’s activities and policies.
Addressing these misconceptions can lead to better compliance and enhanced understanding of an organization’s impact and governance in the community.
Key takeaways
When it comes to filling out the IRS Schedule O, whether you’re using Form 990 or 990-EZ, understanding what to include can make all the difference. Here are some key takeaways to help you navigate the process effectively:
- Understand the Purpose: Schedule O serves as an additional information sheet. It allows organizations to provide clarification and supplementary details regarding their mission, programs, and accomplishments.
- Highlight Key Accomplishments: Use this form to tell your organization's story. Focus on significant achievements and explain how you’ve made an impact in your community.
- Adhere to the Guidelines: Follow the instructions carefully. While you want to be informative, keep your responses clear and concise to align with IRS requirements.
- Review and Update Annually: Each year’s registration may call for different details, depending on your organization’s activities. Regular updates will ensure your information remains relevant and accurate.
By considering these points, organizations can effectively utilize Schedule O to communicate their objectives and successes to the IRS, which can also reflect well on stakeholders and the community at large.