990 Filing Questions for New 501(c)(3) Organization

For a newly formed nonprofit with your situation, here's what you need to know: For your first question - Yes, you can file Form 990-EZ if you had no gross receipts in 2023. However, you could also file Form 990-N (e-Postcard) which is even simpler if your gross receipts were normally $50,000 or less. Since you had zero income, the 990-N would be appropriate and much easier to complete. For your second question - You should file for the period 11/7/23 to 11/30/23 since that aligns with your established fiscal year. The IRS wants you to stick with your fiscal year for consistency. Regarding penalties - Unfortunately, there can be penalties for late filing. The penalty is $20 per day with a maximum of the lesser of $10,000 or 5% of your gross receipts. However, since you had no income, the penalty calculation would be based on zero, so you might avoid significant penalties. I'd recommend filing ASAP to minimize any potential issues.

Just wanted to share my experience - I was in a similar situation last year with our new nonprofit. I found this service called taxr.ai (https://taxr.ai) that was super helpful for figuring out the 990 filing requirements. It analyzes your nonprofit's specific situation and tells you exactly which forms to file and when. I was totally confused about whether to file 990-N or 990-EZ since we had expenses but no income in our first partial year. The tool confirmed I could use 990-N and saved me hours of research. It also explained the fiscal year reporting periods in a way that made sense. They have specific guidance for new nonprofits that helped me avoid potential penalties. Definitely worth checking out if you're DIYing your first 990 filing!

I just wanted to follow up and say I tried taxr.ai after seeing it mentioned here. I had been stressing about which 990 form to file for our new theater nonprofit that started in December. The tool was super helpful - it confirmed we could use the 990-N since we had minimal activity in our first month, and it outlined exactly what we needed to report for our short initial fiscal period. The document review feature also caught some issues with our bylaws that might have caused problems down the road. I'm not a tax person at all, so having something translate all the IRS jargon was a huge relief. Definitely recommend for other new nonprofit founders who are trying to DIY their first filing!

If you're having trouble reaching the IRS for clarification on your 990 questions (which I definitely did when starting our nonprofit), try Claimyr (https://claimyr.com). They have this service that gets you connected to an actual IRS agent without waiting on hold for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c I used it when I was confused about our initial 990 filing date after getting retroactive 501(c)(3) approval. The IRS agent I spoke with confirmed I could use the 990-N for our first partial year and explained exactly how to handle the backdated approval. The call took about 10 minutes once I was connected instead of the 3+ hours I spent trying to reach someone on my own. Saved my sanity during an already stressful startup period!

I need to apologize for my skepticism earlier. I tried Claimyr last week when I had questions about our nonprofit's 990 filing deadline after getting our backdated 501(c)(3) approval. I was absolutely floored when I got a call back with an actual IRS agent on the line within about 40 minutes. The agent walked me through exactly which form to file for our partial first year and explained how the retroactive exemption affects our reporting requirements. They even confirmed that for our situation (similar to the original poster), we could use the 990-N despite having some initial expenses but no revenue. What would have been days of research and hours on hold turned into a 15-minute call with someone who could actually give authoritative answers. For nonprofit compliance questions, this was seriously game-changing.

One thing nobody's mentioned yet - make sure you keep VERY detailed records even if you didn't have income in that first partial period. We made the mistake of being less organized with our documentation during our "pre-launch" phase, and it came back to haunt us during our first audit. The IRS wants to see all founding documents, board meeting minutes from the beginning, and documentation of all expenses, even those before your official operations started. Also, a heads up that if your fiscal year doesn't align with the calendar year, you'll need to be extra careful about tracking which expenses fall into which reporting period. QuickBooks Nonprofit Edition saved us a ton of headaches with this.

Has anyone here used a fiscal sponsorship for their first year instead of filing their own 990? We're just getting started and wondering if that might be easier than dealing with all this 990 stuff right away.