IRS Form 990-T – In the world of nonprofit and tax-exempt organizations, managing finances compliantly is crucial. One key aspect is handling unrelated business income, which may subject these entities to taxation. IRS Form 990-T, officially known as the Exempt Organization Business Income Tax Return, plays a vital role in reporting and paying taxes on such income. This comprehensive guide explores what Form 990-T entails, who must file it, filing requirements, deadlines, recent updates, and more, ensuring tax-exempt organizations stay informed and compliant.
What Is IRS Form 990-T?
IRS Form 990-T is a tax form used by tax-exempt organizations to report unrelated business taxable income (UBTI). UBTI refers to gross income derived from any trade or business that is regularly carried on and not substantially related to the organization’s exempt purpose, aside from the need for funds. This includes activities like advertising revenue, investment income from certain sources, or income from debt-financed property.
The form also serves multiple purposes beyond UBTI reporting:
- Calculating and reporting unrelated business income tax liability under section 511.
- Reporting proxy tax liability under section 6033(e) for certain lobbying or political expenditures.
- Claiming refunds for income tax paid by regulated investment companies (RICs) or real estate investment trusts (REITs) on undistributed long-term capital gains.
- Requesting credits for federal excise taxes paid or small employer health insurance premiums.
- Making elective payment elections under sections 48D or 6417 for certain clean energy credits.
- Reporting UBTI on reinsurance entities.
Exempt organizations, such as those under sections 501(a), 529(a), or 529A(a), use this form to ensure they pay taxes only on income unrelated to their core mission. For instance, a university (a section 501(c)(3) entity) might file if it generates over $1,000 in gross income from an unrelated business activity.
Key exclusions from UBTI include volunteer-run activities, convenience services for members, sales of donated goods, qualified sponsorship payments, and certain games like bingo under specific conditions.
Who Must File Form 990-T?
Not all tax-exempt organizations need to file Form 990-T. Filing is required if:
- The organization has $1,000 or more in gross UBTI (calculated as gross receipts minus cost of goods sold).
- It needs to report proxy tax, other taxes (e.g., under sections 1291 or 1294), or make an elective payment election.
- It’s a college or university with at least $1,000 in gross unrelated business income.
- It’s a trustee for IRAs (including traditional, SEP, SIMPLE, Roth, Coverdell ESAs, Archer MSAs, or HSAs) with UBTI.
- Disregarded entities or foreign exempt organizations meet the criteria.
Each unrelated trade or business must be reported separately on Schedule A (Form 990-T), using NAICS codes for identification. For IRAs, each account is treated as a separate entity and requires its own Employer Identification Number (EIN) if filing.
Even without UBTI, filing may be necessary for refunds, credits, or elective payments. Consolidated returns are allowed for affiliated title-holding companies or certain exempt groups.
How to File Form 990-T?
Filing Form 990-T involves several steps:
- Gather Information: Calculate UBTI by subtracting allowable deductions (e.g., under sections 162 or 167) from gross unrelated business income. A $1,000 specific deduction is available per organization.
- Complete Schedules: Use Schedule A for each separate trade or business. Report income sources like sales, capital gains, partnership income, rents, and more.
- Handle Deductions and Losses: Deductions must be directly connected to the unrelated activity. Net operating losses (NOLs) from pre-2018 years can be deducted, but post-2017 NOLs are siloed by business.
- Electronic vs. Paper Filing: Electronic filing is required for organizations under section 511. For elective payment elections, e-filing is encouraged, but paper filing is sent to the Ogden, UT, service center.
- Pay Estimated Taxes: If expected tax is $500 or more (excluding proxy tax), make installment payments to avoid penalties under section 6655.
- Amendments and Extensions: Use Form 8868 for a 6-month extension. Amended returns can be filed within 3 years.
For organizations with total gross income from all unrelated businesses exceeding $10,000, complete all applicable parts of Schedule A; otherwise, focus on relevant sections.
Deadlines for Filing Form 990-T
The due date depends on the entity’s type and tax year:
- For trusts and IRAs: 15th day of the 4th month after the tax year ends (e.g., April 15 for calendar-year filers).
- For other exempt organizations: 15th day of the 5th month after the tax year ends (e.g., May 15 for calendar-year filers).
If the due date falls on a weekend or holiday, it shifts to the next business day. Elective payment elections must be made on a timely filed return, including extensions. Failure to file on time can result in penalties, though waivers may apply for certain underpayments.
Recent Changes and Updates for 2025 and 2026
The IRS regularly updates Form 990-T to reflect legislative changes. For tax year 2025:
- New election under section 1062 to defer net tax on gains from qualified farmland sales or exchanges to qualified farmers (effective post-July 4, 2025). Report on Part III, line 6k, with Form 1062 attached.
- Waiver of estimated tax underpayment penalties for section 1062 elections per Notice 2026-3.
- New deduction or amortization rules for domestic research expenditures under section 174A (post-Dec. 31, 2024), with transition guidance in Rev. Proc. 2025-28.
- Option for direct deposit of overpayments using Form 8050.
- Corporate alternative minimum tax requires attaching Form 4626 based on adjusted financial statement income.
- Expanded elective payments for credits like advanced manufacturing.
As of January 23, 2026, the IRS page for Form 990-T includes developments like new payment options for businesses (March 18, 2025) and a filing exception for tax-exempts from Form 4626 (October 23, 2024). For 2026 filings, if the form isn’t available, use the 2025 version with the 2026 tax year noted.
Penalties for Non-Compliance
Late filing or underpayment can lead to penalties. For example, under section 6655, penalties apply for underpaid estimated taxes unless waived (e.g., for new farmland gain elections). Organizations must also make returns available for public inspection for three years, with potential fees for copies. Always consult IRS guidance or a tax professional to avoid issues.
Download IRS Form 990-T PDF
To get started, download the latest version of IRS Form 990-T directly from the official IRS website. The PDF is available here: https://www.irs.gov/pub/irs-pdf/f990t.pdf.
For instructions, visit https://www.irs.gov/instructions/i990t.
Conclusion
Navigating IRS Form 990-T is essential for tax-exempt organizations engaging in unrelated business activities. By understanding UBTI, filing requirements, and recent updates, nonprofits can maintain compliance and focus on their mission. For personalized advice, consult a qualified tax advisor or refer to official IRS resources. Staying updated ensures smooth tax seasons ahead.