It is imperative for NFPs (not-for-profit organizations) to diligently choose the appropriate Form 990 return each year to steer clear of incurring hefty penalties for noncompliance. An incomplete or erroneous recovery may lead to rejection by the IRS, particularly when filing electronically. Thoroughly reviewing and correcting common filing errors reported by the IRS is vital to ensure precise preparation and review of IRS Form 990 returns before submission.
The most common cause of IRS 990 return rejection is incomplete or absent schedules. It is crucial to use the proper return for the corresponding tax period and remember that specific non-profit organizations are barred from filing Form 990-EZ and 990-N.
How to complete Form 990 without committing any mistakes?
Sell your firm’s purpose: Providing comprehensive details regarding your organization’s programs and ongoing efforts toward accomplishing the not-for-profit’s original goal is essential. State that your organization is deeply committed to serving the needs of your community by implementing a wide range of programs that fulfill specific requirements.
- Report all the income and revenue: For an accurate and factual representation of your company’s financial standing or situation, a thorough review of Part VIII of Form 990 is vital. This section decently offers a comprehensive and detailed account of your revenues and income, which serve as the basis for the “revenue” summary in Part I. By carefully examining this section, we can ensure that our financial reports prepared for you are reliable and transparent.
- Showcase formal job descriptions: It is crucial to establish a comprehensive board policy that clearly outlines the individuals influencing the organization’s governance before completing the first Form 990. When listing the individuals on Form 990, it is essential to note that each person can only be designated one of the following titles unless they are both an officer and a trustee or director:
- Former
- Highest compensated employee
- Key employee
- Officer
- Institutional trustee
- Individual trustee or director
By adhering to these guidelines and ensuring that each individual is designated the appropriate title, the report of your organization’s leadership and governance structure is accurately and transparently prepared
The Bottom-Line
For non-profit organizations, completing an accurate Form 990 every year is essential regardless of whether they choose to e-file or submit a paper return. It is where our accounting specialists’ expertise can prove invaluable.
Prudent Accountants, one of the finest CPA firms in Minneapolis, can assist organizations in navigating the complexities of Form 990 and ensure that all necessary information is included to avoid costly errors or omissions. With our years of experience and knowledge of non-profit accounting and compliance, we can help minimize the potential risks of errors and ensure that your organization’s Form 990 is completed promptly and accurately in Minnesota.
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