Help with Form 990 Filing Questions for New 501(c)(3) Organization

I just started a non-profit in the last quarter of 2023. We recently got our 501(c)(3) status approved, backdated to 11/15/23 when we legally formed with both the state and IRS. Our fiscal year is January 1 to December 31. The organization didn't actually begin operations until late January 2024, so there was basically no income or expenses before that date, and definitely no revenue during 2023. If things go as planned, we're expecting around $65K this year and potentially $375K+ in future years. I'm planning to use a professional accountant for future filings, but since there was practically no financial activity in 2023, I'm trying to handle the 990 myself for that first partial year. I'm stuck on a couple points though. Can I file the 990-EZ for 2023 since we had no income during that period? And should I be filing for 11/15/23-12/31/23 or should I use a different reporting period? Also - I know I'm behind on filing, but someone told me there's no late penalty for new organizations, and I was worried about messing up our pending 501(c)(3) application, so I decided to wait. Now I'm reading that there might actually be penalties, so I'm getting concerned.

0 coins

19 comments

Sienna Gomez

•8M

I can help clarify this for you! For a newly formed 501(c)(3) organization, you generally need to file a return for your first tax year even if there was little to no activity. Since you had no income and likely minimal expenses in 2023, you could file Form 990-N (e-Postcard) rather than 990-EZ. The 990-N is available for organizations with gross receipts normally less than $50,000. It's a very simple electronic filing. For your filing period, you should file for the partial year from your formation date (11/15/23) through the end of your fiscal year (12/31/23). This establishes your filing record with the IRS. Regarding late filing penalties - there can indeed be penalties for late filing, especially if you miss filing for three consecutive years (which can result in automatic revocation of tax-exempt status). However, for a first-time filing with minimal activity, you may be able to get penalties abated by providing a reasonable cause explanation.

0 coins

Sienna Gomez

•8M

The 990-N eligibility is based on whether your organization normally has gross receipts of $50,000 or less. For a new organization, you can generally use the 990-N for your first tax period if your actual receipts were under $50,000, even if you expect future growth. For penalty abatement, you can include a reasonable cause statement with your filing explaining the circumstances. This works best when you're proactive rather than waiting for a penalty notice. Include details about being a new organization, waiting on 501(c)(3) approval, and having minimal financial activity during the period.

0 coins

Abigail bergen

•8M

Just wanted to share my experience - I went through a similar headache with my nonprofit last year. After hours of research and calls that went nowhere, I tried this AI tax assistant at https://taxr.ai that specializes in nonprofit tax filings. It analyzed our situation and clarified exactly what we needed to file based on our formation date and fiscal year. Super helpful for these confusing startup scenarios where the standard IRS guidance doesn't seem to cover your specific situation.

0 coins

Abigail bergen

•8M

It provided custom advice for our specific situation, not just general guidelines. I uploaded our formation documents and it identified exactly which form to file based on our actual timeline and activities, along with specific sections to pay attention to. The tool handles both federal and state filings. It was especially helpful for coordinating the state charitable registration requirements with federal 990 filings, which saved us from making a mistake that could have caused problems with our fundraising permits.

0 coins

Ahooker-Equator

•8M

Just wanted to follow up - I gave taxr.ai a try for my education nonprofit and it was legitimately helpful. I was confused about how to report some in-kind donations on our first 990-EZ and was getting conflicting advice. The system analyzed our specific situation and provided clear instructions for both federal and state requirements. It actually saved me from making a mistake on the public support test calculation that could have affected our foundation grant eligibility. Worth checking out if you're DIYing your nonprofit filings.

0 coins

Tyrone Hill

•8M

If you're still struggling with IRS questions, you might want to try Claimyr at https://claimyr.com - I was waiting forever to speak with someone at the IRS about our nonprofit filing requirements. Claimyr got me connected to an actual IRS agent in about 20 minutes when I'd been trying for weeks on my own. You can see how it works at https://youtu.be/_kiP6q8DX5c. The agent I spoke with walked me through the exact forms I needed for our first partial year and how to handle the late filing situation.

0 coins

Lena Kowalski

•8M

I hate to admit when I'm wrong, but I tried Claimyr after posting that skeptical comment, and it actually worked. Got through to an IRS nonprofit specialist in about 30 minutes when I had previously given up after 2+ hours on hold. The agent helped me understand exactly what I needed to include for my late 990-EZ filing, including how to properly document our start-up expenses before we had any revenue. They even emailed me confirmation of our conversation that I can attach to my filing to help avoid penalties. Definitely saved me from making some major mistakes on our first year's filing.

0 coins

DeShawn Washington

•8M

Just to add a practical tip - make sure you document all your startup expenses clearly, even if minimal. My nonprofit had similar timing (formed in November, didn't really operate until January), and we were questioned about some early board meeting expenses and initial website costs during the gap period. Having detailed documentation saved us a headache. Also, if you have any assets acquired during that period (even simple things like a domain name), you'll need to report them.

0 coins

DeShawn Washington

•8M

You should list them as organizational costs/startup expenses in the appropriate sections of the 990-EZ. The presence of expenses without income doesn't automatically disqualify you from filing the 990-N - it's based on gross receipts, not net activity. However, if you want to establish a proper accounting of these initial expenses (especially if you'll be applying for grants that might look at your financial history), the 990-EZ provides better documentation than the 990-N, which is extremely minimal. The 990-EZ also allows you to carry these startup costs forward properly into your first full operating year.

0 coins

Keisha Williams

•2d

Just want to echo what others have said about documenting everything, even for that short initial period. I went through something similar with my nonprofit - we incorporated in late 2022 but didn't really start operations until 2023. For your situation, since you had zero revenue in 2023 and minimal expenses, the 990-N (e-Postcard) is probably your best bet for that first partial year (11/15/23-12/31/23). It's much simpler and you can file it online in about 10 minutes. The key eligibility factor is that your gross receipts were under $50K for that period, which they clearly were. Regarding penalties - yes, there can be late filing penalties ($20 per day up to $10K for small organizations), but the IRS is generally reasonable about waiving them for new organizations with legitimate reasons. When you file, include a statement explaining you were a newly formed organization waiting for 501(c)(3) determination and had no significant financial activity. I did this for our late first filing and never heard anything about penalties. One thing to keep in mind - make sure your fiscal year is properly established with the IRS. Since you're doing calendar year (Jan 1 - Dec 31), that should be straightforward, but double-check that it matches what you indicated in your 1023 application.

0 coins