Yes, nonprofits do file tax returns. Almost every organization the IRS recognizes as tax-exempt under Section 501(a) has to file an annual information return, even though it doesn’t owe income tax on its core mission activities. The form depends on how much money the organization takes in, a handful of categories (mainly churches) are excused, and skipping the return for three years in a row costs the organization its tax-exempt status automatically.
Which Return Your Nonprofit Files
Internal Revenue Code Section 6033 requires organizations exempt under Section 501(a) to file an annual return unless a specific exception applies. The IRS splits that obligation across four forms based on financial size.
- Form 990-N, often called the e-Postcard, is for organizations whose gross receipts are normally $50,000 or less. It’s a short electronic notice confirming the organization still exists.
- Form 990-EZ is the shortened return for organizations with gross receipts under $200,000 and total assets under $500,000.
- Form 990 is the full return, used by everyone above those thresholds. It runs more than a dozen pages before schedules.
- Form 990-PF is filed by private foundations regardless of size or revenue, and it also calculates a tax based on the foundation’s net investment income.1Internal Revenue Service. 2025 Instructions for Form 990-PF
The “normally $50,000 or less” test isn’t just last year’s number. An organization at least three years old averages gross receipts over the prior three tax years. Newer organizations use different thresholds: $75,000 or less in pledged or received gifts during the first year, or an average of $60,000 or less over the first two years.2Internal Revenue Service. Annual Electronic Filing Requirement for Small Exempt Organizations – Form 990-N (e-Postcard) An organization eligible for the e-Postcard can always choose to file Form 990-EZ or the full Form 990 instead, and some do voluntarily to show donors more detail.
Paper filing is off the table for most nonprofits. The Taxpayer First Act requires Forms 990, 990-EZ, 990-PF, and 990-T to be filed electronically for tax years beginning after July 1, 2019.3Internal Revenue Service. E-File for Charities and Nonprofits
Who Doesn’t Have To File
A short list of organizations is legally excused from the annual return. The biggest category is religious: churches, their integrated auxiliaries, conventions or associations of churches, and the exclusively religious activities of religious orders.4Office of the Law Revision Counsel. 26 USC 6033 – Returns by Exempt Organizations These groups can file voluntarily, and some do, but the IRS won’t penalize silence.
Governmental units and affiliates that meet specific criteria are also excused, as are state institutions whose income is excluded under Section 115.5Internal Revenue Service. Annual Exempt Organization Return: Who Must File Certain political organizations qualify for statutory exceptions too.6Internal Revenue Service. Political Organization Annual Reporting Requirements: Political Organizations Required to File Form 990 And non-private-foundation organizations with gross receipts normally $5,000 or less are excused under Section 6033(a)(3).4Office of the Law Revision Counsel. 26 USC 6033 – Returns by Exempt Organizations
Even excused organizations should keep records that prove they still qualify for exemption. If the IRS questions the organization’s status, the burden of proving eligibility falls on the organization.
When the Return Is Due
The annual return is due on the 15th day of the 5th month after the close of the organization’s tax year. Most nonprofits use a calendar year ending December 31, which makes the deadline May 15.7Internal Revenue Service. Exempt Organization Filing Requirements: Form 990 Due Date A fiscal year ending June 30 would push the deadline to November 15.
Need more time? Form 8868 grants an automatic six-month extension with no reason required, provided you file it by the original due date. For a calendar-year filer, that moves the deadline to November 15.8Internal Revenue Service. Instructions for Form 8868 An extension to file is not an extension to pay any tax owed, which matters if the organization owes unrelated business income tax. That balance should still be paid by the original deadline to avoid interest.
Penalties and the Three-Year Revocation Rule
Missing the deadline without an extension triggers daily penalties. Organizations with gross receipts of $1,208,500 or less pay $20 per day the return is late, capped at $12,000 or 5 percent of gross receipts, whichever is smaller. Larger organizations pay $120 per day, capped at $60,000.9Internal Revenue Service. Exempt Organizations Annual Reporting Requirements – Filing Procedures: Late Filing of Annual Returns Those figures are inflation-adjusted from base amounts in Section 6652(c).10Office of the Law Revision Counsel. 26 USC 6652 – Failure to File Certain Information Returns, Registration Statements, Etc.
The bigger risk isn’t the daily fine. Under Section 6033(j), an organization that fails to file its required return or notice for three consecutive years automatically loses its tax-exempt status. The revocation is not discretionary, the IRS cannot undo it, and there is no appeal.11Internal Revenue Service. Automatic Revocation of Exemption
Getting Exempt Status Back
Reinstatement requires reapplying from scratch, even if the organization never had to file an initial application. That means Form 1023 or Form 1023-EZ for 501(c)(3) organizations, or Form 1024 or 1024-A for other types. The user fee is $275 for Form 1023-EZ and $600 for Form 1023.12Internal Revenue Service. Form 1023 and 1023-EZ: Amount of User Fee
Organizations small enough to have filed the 990-N or 990-EZ during the missed years, and never previously revoked, may qualify for streamlined retroactive reinstatement using Form 1023-EZ. The application must be submitted within 15 months of the later of the revocation letter date or the date the organization appeared on the IRS revocation list.13Internal Revenue Service. Automatic Revocation – How to Have Your Tax-Exempt Status Reinstated Miss that window and you’re facing the full Form 1023 with the higher fee and longer processing time. Between revocation and reinstatement the organization is taxable, and donations aren’t deductible during that gap, which can wreck fundraising.
Other Tax Filings Nonprofits Owe
The annual information return isn’t the only IRS filing a nonprofit may face.
Unrelated Business Income Tax
Exempt status doesn’t cover everything an organization earns. When a nonprofit regularly carries on a trade or business that isn’t substantially related to its exempt purpose, the net income is subject to unrelated business income tax. An organization with $1,000 or more in gross income from unrelated business activities must file Form 990-T. Organizations taxed as corporations pay the flat 21 percent federal corporate rate; exempt trusts pay at graduated trust rates instead.14Internal Revenue Service. 2025 Instructions for Form 990-T – Exempt Organization Business Income Tax Return
Common triggers include a gift shop selling items unrelated to the mission, debt-financed rental property, and paid advertising in the organization’s publications. Passive investment income like dividends and interest is generally excluded. The Form 990-T deadline matches the annual information return, and the same six-month extension via Form 8868 applies.
Employment Taxes
Nonprofits with employees withhold and pay federal employment taxes like any employer, with one carve-out. Both employer and employee pay 6.2 percent Social Security tax on wages up to $184,500 in 2026, plus 1.45 percent each in Medicare tax on all wages.15Social Security Administration. Contribution and Benefit Base Federal income tax withholding applies too.
The exception: 501(c)(3) organizations are exempt from the Federal Unemployment Tax Act.16Internal Revenue Service. Section 501(c)(3) Organizations – FUTA Exemption Most states still require these organizations to provide unemployment coverage for their workers, either by participating in the state system or by reimbursing the state for claims paid.
State Filings Are Separate
Federal returns are only part of the picture. About 40 states require charities to register before soliciting donations from their residents, and most require annual renewals.17Internal Revenue Service. Charitable Solicitation – Initial State Registration Fees range from nothing to sliding scales tied to revenue. Organizations that solicit online or by mail across state lines may need to register in every state where they have donors.
Many states also require a separate annual corporate report with the Secretary of State, whether or not the organization solicits donations. Letting that lapse can lead to administrative dissolution under state law, which is a different problem from losing federal exempt status.
The Final Return When a Nonprofit Closes
Dissolving an organization doesn’t end the filing obligation. The organization checks the “Final return/terminated” box on the Form 990 header and attaches Schedule N, showing how remaining assets were distributed.18Internal Revenue Service. Instructions for Form 990 Return of Organization Exempt From Income Tax For a 501(c)(3), remaining assets generally must go to another 501(c)(3) or a government entity; the founders cannot keep what’s left. Skipping this final return is a common oversight that can leave officers and directors personally exposed to IRS penalties.