IRS Instruction 990-EZ – In the world of nonprofit and tax-exempt organizations, staying compliant with IRS requirements is crucial for maintaining your status and avoiding penalties. One key filing for smaller organizations is Form 990-EZ, the Short Form Return of Organization Exempt From Income Tax. This guide breaks down the 2025 IRS instructions for Form 990-EZ, helping you understand who must file, how to complete it, and important updates. Whether you’re running a small charity, club, or political group, these instructions ensure accurate reporting of your finances and activities.
What Is IRS Form 990-EZ and Its Purpose?
Form 990-EZ is an annual information return designed for smaller tax-exempt organizations to report their financials, activities, and compliance to the IRS. It’s a simplified version of the full Form 990, aimed at organizations with gross receipts typically under $200,000 and total assets under $500,000 at the end of the tax year. The form helps the IRS monitor exempt organizations under section 501(a), nonexempt charitable trusts under section 4947(a)(1) (excluding private foundations), and section 527 political organizations.
The primary purpose is to provide transparency: most of the form is open to public inspection, promoting accountability. It may also satisfy state reporting requirements, reducing duplicate filings. Note that private foundations must use Form 990-PF instead, and very small organizations (gross receipts ≤ $50,000) can opt for the simpler Form 990-N e-Postcard.
Who Must File Form 990-EZ?
Not all tax-exempt entities qualify for or are required to file Form 990-EZ. Here’s a breakdown:
- Eligibility Thresholds: Organizations with gross receipts normally less than $200,000 and year-end total assets less than $500,000 can file Form 990-EZ. If either threshold is met or exceeded, you must file the full Form 990.
- Types of Organizations: This includes most section 501(c) groups (like charities, social clubs, and trade associations), section 527 political organizations (unless receipts are under $25,000 or $100,000 for qualified state/local groups), and certain trusts.
- Exceptions and Exemptions: Churches and certain religious organizations are generally exempt from filing. Hospitals, donor-advised fund sponsors, and controlling organizations under section 512(b)(13) must use Form 990. Foreign or U.S. territory organizations file if they have significant U.S. connections or receipts over $50,000 from U.S. sources.
- Special Rules: For social clubs under section 501(c)(7) or (c)(15), there are unique gross receipts tests (e.g., non-member receipts ≤ 35% for exemption). Even if your exempt status is pending, you must file and check the “Application pending” box.
If your organization has dissolved or liquidated, mark it as a final return and attach Schedule N.
When, Where, and How to File Form 990-EZ?
Filing deadlines and methods are strict to avoid penalties:
- Due Date: The 15th day of the 5th month after your accounting period ends (e.g., May 15 for calendar-year filers). For dissolved organizations, file by the same deadline after the event.
- Extensions: Use Form 8868 to request an extension.
- Filing Method: Electronic filing is mandatory for 2025 tax years via IRS-approved software. Paper filings are only for prior years in limited cases.
- Amended Returns: Submit a new form, check “Amended return,” and explain changes in Schedule O.
For public inspection, keep copies available at your office or on your website, and provide them upon request (with reasonable fees). The IRS estimates an average of 71 hours to prepare and file, with potential costs around $700–$1,800.
Step-by-Step Guide to Completing Form 990-EZ
Form 990-EZ has a heading section, five main parts, and required schedules. Use the same accounting method (cash or accrual) throughout, and round to whole dollars. Here’s an overview:
Heading (Items A–L)
- Enter your organization’s name, address, EIN, accounting period, and tax-exempt status. Check boxes for changes, and calculate gross receipts to confirm eligibility.
Part I: Revenue, Expenses, and Changes in Net Assets
- Report contributions, program revenue, investments, asset sales, gaming/fundraising, and other income. Deduct expenses to find net revenue, then adjust for beginning net assets and other changes.
Part II: Balance Sheets
- List cash, land, other assets, liabilities, and net assets at the beginning and end of the year. Ensure totals match Part I.
Part III: Statement of Program Service Accomplishments
- Describe your top three programs by expenses, including achievements and revenues. Use Schedule O for additional details.
Part IV: List of Officers, Directors, Trustees, and Key Employees
- Provide names, titles, hours worked, compensation, and benefits for key personnel.
Part V: Other Information
- Answer questions on activities, lobbying, loans, excise taxes, and more. List states where you operate and disclose foreign accounts if applicable.
Attach schedules like A (public support), B (contributors), C (lobbying), G (fundraising), and O (supplemental info) as needed.
Recent Changes and Reminders for 2025
For 2025, electronic filing remains mandatory, and the highly compensated employee threshold is $160,000. Reminders include no SSNs on public forms, using good faith estimates for contributions, and filing Form 990-T for unrelated business income over $1,000. Organizations should maintain records for substantiating donations and asset sales.
Penalties for Non-Compliance
Failure to file on time can result in $25 per day penalties (up to $13,000 or 5% of gross receipts), with higher amounts for large organizations. Automatic revocation occurs after three consecutive non-filings. Other penalties include $10 per day for responsible persons, up to 25% taxes on excess benefits, and fines for incomplete public inspections.
Download the Official IRS Instructions for Form 990-EZ
To get started, download the full 2025 Instructions for Form 990-EZ directly from the IRS website: https://www.irs.gov/pub/irs-pdf/i990ez.pdf. This PDF provides detailed line-by-line guidance.
Frequently Asked Questions About Filing Form 990-EZ
- Can I file Form 990-EZ if my gross receipts exceed $200,000 occasionally? No, use the “normally” test: average over the current and two prior years.
- What if I make a mistake? File an amended return promptly to avoid penalties.
- Do I need to report donated services? Include their value in program descriptions but not in expenses or revenue.
- How do I value noncash contributions? Use fair market value at the time of donation.
By following these IRS Form 990-EZ instructions, your organization can file accurately and maintain good standing. Consult a tax professional for complex situations, and always use the latest IRS resources for updates.