Form 990 vs. 990-EZ: What's the Difference?

As a nonprofit organization, it’s essential that you understand which IRS forms you need to file for compliance. The Form 990 series includes several options, but two of the most common are Form 990 and Form 990-EZ. So, what’s the difference, and how do you know which is right for you?

SSL Associates is a Chicago-based CPA firm that provides nonprofit tax services nationwide, helping tax-exempt organizations understand and fulfill their IRS filing requirements. Let's explore what makes these forms different so you can determine which one your organization should use.

Form 990: The Complete Return

Form 990 serves as the comprehensive annual information return for tax-exempt organizations. This longest form in the 990 series requires detailed reporting of your organization's finances, governance, and activities during the tax year. The IRS then uses this information to evaluate your organization's operations and ensure you’re compliant with tax-exempt status requirements.

Form 990-EZ: The Simplified Version

Form 990-EZ represents a streamlined alternative for smaller tax-exempt organizations. While it captures similar information to the full Form 990, it requires less detailed reporting and fewer schedules. This shortened version helps reduce the administrative burden on smaller nonprofits while still maintaining necessary oversight.

Key Differences Between Form 990 and 990-EZ

While both forms serve a similar purpose, there are notable distinctions between them that you should consider:

1. Filing Requirements and Thresholds

Your organization's gross receipts and total assets determine which form you must file. Form 990-EZ is available to organizations with gross receipts less than $200,000 and total assets below $500,000. If your organization exceeds either threshold, you must file the full Form 990.

2. Reporting Requirements

The full Form 990 contains 12 comprehensive parts requiring extensive financial reporting, organizational details, and program descriptions. Form 990-EZ, with just 6 parts, requires less detailed information while still capturing essential data about your organization's activities and finances.

3. Required Schedules

The difference in required schedules is significant. Form 990 may require up to 16 additional schedules depending on your organization's activities. Form 990-EZ filers typically complete fewer schedules, with only 8 possible schedules that might apply.

Form 990 & 990-EZ: Practical Examples and Common Scenarios

Let's explore the practical applications of Form 990 and Form 990-EZ in common nonprofit scenarios.

Scenario 1: Growing Organization

Let’s say your nonprofit's gross receipts are $180,000, but your total assets reach $550,000. Despite having receipts under the Form 990-EZ threshold, your assets exceed the limit. This means you must file the full Form 990.

Scenario 2: Voluntary Full Filing

Here’s another scenario: Your organization qualifies for Form 990-EZ with $150,000 in gross receipts and $400,000 in total assets. However, you may choose to file the full Form 990 if you want to offer stakeholders more comprehensive information.

Scenario 3: Year-to-Year Changes

If your organization filed Form 990-EZ last year, you'll still need to reassess your filing requirements each tax year based on current gross receipts and assets. Your required form may change as your organization grows or contracts.

990 & 990-EZ: Due Dates and Filing Options

Both forms are due on the same date, which is the 15th day of the fifth month after your fiscal year ends. For calendar-year organizations, this means May 15. Electronic filing is now mandatory for both forms to make the submission process more streamlined.

Form 990 vs. Form 990-EZ: How to Select the Right One

When choosing between Form 990 and 990-EZ, here are the factors to consider:

• Your organization's size and complexity
• Stakeholder expectations for transparency
• Administrative capacity to complete the longer form
• Future growth projections
• Grant requirements (some funders require the full Form 990)