Form 990-Pf Il *--'Return Of Private Foundation: Fill & Download for Free

There are a few different kinds of nonprofits, and they have varying reporting and tax requirements.Forming an NFP OrganizationThis is done by forming a not for profit corporation with the home state's Secretary of State or similar office. There are annual reports and fees that must be filed and paid to maintain this organization, though they are generally less than a traditional corporation. It is generally unlawful for an organization to operate as a tax exempt organization (explained below) without maintaining their organization with the state office.Applying for Tax Exempt Status With the IRSAn organization that wants to be tax exempt must file a form 1023 under section 501(c)(3) or form 1024 under section 501(a). This is a one-time form and fee. There is also an EZ version of the 1023 that is available for those that qualify.IRS Annual Returns and the Form 990The only kind of organization that does not need to file an annual return with the IRS is a "church": which is a church, or synagogue, or mosque, or other place of worship that also qualifies under section 501(c)(3). There are certain allowed activities under a place of worship like a parochial school or children's summer camp that do not fall outside of the "church" designation. A church is not disallowed from filing an annual report to the IRS, but they generally don't have to. However, some churches have found that some wealthy donors will not supply funds to an organization without the transparency a 990 offers, so there is some incentive to file.Only an organization that is tax exempt under 501(c)(3) or 501(a) may file a 990. All other NFP organizations must file the default return for their corporate and/or business type. For example, a homeowners association that does not fall under 501(a) must file a form 1120-H.There is a 990-EZ form available for small NFP organizations and a 990-N, also called the "postcard 990" for particularly small NFP tax exempt organizations.There are two additional types of 990 forms called 990-PF and 990-T. A 990-PF, Private Foundation, is for organizations who do not go to the general public to seek support. They get their funds mostly from government grants and/or membership dues and must pay some taxes on their net revenue. A 990-T is filed when an NFP operates somewhat outside of their stated mission to raise funds. An example would be a school that also owns and operates a hotel. The hotel operation may not be a part of their stated mission (unless perhaps they teach hotel management) and they may be required to pay taxes on this net revenue.State Department of Revenue Annual ReturnsThese vary by state, but they generally require similar reporting to the 990. In my home state of Illinois, the IL Attorney General's Office requires an IL-AG990 to be filed annually. Other State's have similar requirements.Sales TaxesNFP organizations who sell merchandise must collect and file sales tax returns like any other business.Payroll TaxesNFP organizations must withhold and report payroll taxes like any other business with employees. Certain types of employees who have the IRS designated title of "minister" may have different levels of taxation associated with them.A minister's salary is taxed under the SECA Act rather than the FICA Act. This means that the church may not pay the minister's employer portion of social security and medicare. A minister must file a schedule SE on his or her personal tax return and pay the full social security taxes as if they were a 1099 contractor. However, a minister may chose to file a form 4361 and opt out of social security taxes at their current and any future ministerial positions. Any minister who does this may not be eligible to eventually collect social security unless they have paid in sufficiently at other non-ministerial positions.A minister may also have a parsonage allowance. Parsonage is a housing allowance decided on by the board of the church. This allowance is not taxed under ordinary federal taxes on the minister's personal tax return.This affects how the organization must track their ministers' salaries and how they must report these salaries on the W2 forms at the end of the year.Unemployment TaxesNFP organizations exempt under 501(c)(3) or 501(a) are also exempt from federal and state unemployment taxes and filings.