Thank you so much for actually giving some good examples, and for commenting on the stipends question. I have been searching for that exact answer for a small school NP !
quick question, a school PTA booster 501 c 3. For field trips, where you organize an outing, parents pay a donation for the cost of the tickets to the booster (usually the exact price of the ticket, although some do round up and give more money than the ticket cost on occasion), and the booster books the tickets at a group rate. Students can apply for scholarships to be paid for by the booster but many parents pay for their kid's ticket. The money coming in: would this be line 2, as the expectation is that they will receive an item of same value back, or is it still classed as a contribution? If this money was to be classed as a contribution though, it would be Line 1 and but not line 6 b-d And if the PTA did give the child a free or part free ticket, the cost of what the booster paid for the ticket not covered by the child's family would go under line L10 as a Grant or other similar? The overall cost of the tickets or field trip would be on schedule O, in a sentence similar to what's shown on the video, and on Line 16 other expenses? Seems like such a gray area as yes we raise the money via parent donations, but its not what i would consider a fundraiser in the general scope of things, more a special event. We are one of several small charter schools under an umbrella booster club so all can claim the NP status and be legit. Thank you
If you are charging a parent $50 for a ticket, and the parent pays $50, the $50 goes on line 2. If the parent pays $60, then $50 goes on line 2 and $10 goes on line 1 as a contribution. A field trip is a program service event, not a fundraiser, so it doesn't appear on line 6 at all, even if it does generate some contributions. The total cost of the tickets paid by the booster goes on line 16 as a program service expense. You can mention in Part III, line 28 something to the effect that "The booster provided 8 tickets with a value of $50 each to students who could not otherwise afford to attend the field trip." Alternatively, you could split the cost of the tickets between line 10 and line 16 by showing the cost of the "scholarship tickets" as a grant or similar amount on line 10. I personally prefer the first method. For instance, if you took all the students out for a hamburger on the way home for the field trip and paid for it with general contributions, it would not be considered a grant, so I'm not sure the free tickets should be considered a grant. But either way would be acceptable so don't overthink it.
Your videos are so helpful! I have a couple questions. If an organization provided fee-waived and sliding scale services for indigent individuals, would that reduction in cost be counted as an expense in line 10? Or would just the expenses incurred by the organization for that service go on line?
If you are waiving fees or reducing the fees for services, this shows up in the revenue section as less revenue. That's it. You are just reporting less revenue than you would have if you had not waived the fees. A reduction in fees is not an expense. If you want to disclose the amount of fee waivers or reductions, you can do that on page 2 of the 990-EZ, Part III, line 28, as part of the description of program service accomplishments. Example: "The organization's fee-waiver and sliding scale fees for services resulted in fee reductions totaling $35,000 during the year. Contributions received helped cover costs incurred to provide the services."
This video was excellent! Where do you record a board member expense that was reimbursed to the board member? I wasn't sure if you meant it should be under salaries, or other compensation? Thanks!
You have to be careful when discussing "reimbursements" to a board member or officer. It has to be clear that it is not a reimbursement of personal expenses incurred by the board member. So, I'm assuming that the board member paid for some expense, like office supplies, on behalf of the organization, and now the organization is paying him/her back. That's fine. This type of reimbursement is not compensation at all. If it was for office expenses paid for by the board member, show it on line 16 as "office expenses." Show it on the expense line category where it belongs, based on the type of expense it was for. If it was for postage, show it on line 15. You don't need to label it "reimbursement." Just call it office expenses, or whatever the type of expense was reimbursed.
Thank you! It was actually the board member being reimbursed for travel expenses for a board meeting. I contacted the IRS, because I just needed to be sure. It was less than $100.
Great video, but quick question for Stipends given to members of the organization and gift cards or prizes as well as volunteer expense is that reported under line 12?
Yes, I'd probably put it on line 12. Reimbursements to volunteers should be shown on whatever line corresponds to the type of expense that was reimbursed. If you reimbursed a volunteer for mileage driven, I'd call it transportation expense and put it on line 16. An expense reimbursement is not compensation.
Thanks for the great video! I do have a question that I was hoping you might address. Our church pays for the continuing education of the pastor. What would we record this under? Also, we frequently take food to the homes of sick or recently alleviated people in our community. Would this just be a line as other, "food for people in the community"?
Video is great. It is very helpful for someone like me, who has never completed a Form 990/Form 990 EZ. I have a question, on what line would I include internet access expense?
It could either go on line 14 or line 16. Usually, if there are rent and utilities expenses on line 14, I may lump internet access in with those expenses. Otherwise I just put it on line 16.
Thank you for being so very practical. Please help me to understand, If I am running my non-profit out of my home office, do I list utilities, etc on line 14, or do I list it on my personal income tax 1040 from my day job? Also, am I understanding clearly that the schedule O is only needed if it is over $5000?
Schedule O is mandatory for the 990-EZ and the 990. It sounds like you are referring to whether to list line 10 grants on Schedule O. If no one received $5K or more and is not required to be listed on Schedule O, find something else to put on schedule O. Usually all returns will show a listing of line 16 other expenses on Schedule O, if nothing else. Your nonprofit is a separate legal entity. It is not like a Schedule C business. If you are charging the nonprofit rent for the use of your home office, it will be an expense for the nonprofit corp and taxable income to you on Form 1040 schedule E. If you are providing the office space at no charge to the nonprofit, since it is not considered your "trade or business," there would be no home office deduction. If you are providing services to the nonprofit and the nonprofit is paying you as an independent contractor, when you report the income on your Form 1040 schedule C, you could take a home office deduction against your self-employment income. You have to be careful with that because an officer of a nonprofit is usually considered an employee, not an independent contractor, and should be receiving a W-2. Most small nonprofits pay officers as independent contractors, but in most cases this is not correct. If your nonprofit is a private foundation rather than a public charity, you should not have any financial transactions with the foundation at all. I'm assuming yours is probably a public charity, but I don't know.
@@NonprofitTaxHelp very small school booster class, do you happen to know how to file electronically for free? Usually i would use the free turbo tax for personal stuff, but that seems to not be an option for the 990 ez. We have a lot of field trips that are paid by parents through the booster so took us over the $50,000.
u That's one of the things that makes the 990-EZ much simpler than the full 990--it has no statement of functional expenses. It is not required to provide a breakout between program/admin/FR on the 990-EZ. However, you can add any explanation you like to Schedule O. Total expenses are shown on page 1, line 17 of the 990-EZ. If someone wants to know how much of that was spent directly on programs, they have to go to page 2, Part III, lines 28 through 32. You can add any type of explanation to Schedule O, so feel free to list all the program expense line items on Schedule O if you want to. You could also disclose fundraising expenses on Schedule O, since they are not specifically disclosed on the 990-EZ.
Very informative. I do have a question about the professional fees - if a PTA org paid a fundraising company a $2000 fee to handle their fundraising project, the organization is required to send a 1099 Misc ?
If the fundraising company is a corporation (either "C" or "S" corp, or an LLC that has elected to be taxed as a corp) then the PTA would not have to send a 1099-MISC. Otherwise, yes. If the fundraising company is a sole proprietorship, a partnership, or single-member LLC, you would need to send a 1099-MISC. However, there is no prohibition on sending a 1099-MISC to a corporation if you want to.
This is Great information. Thank you so much! I really appreciate it. I'm starting a local food bank and have no money so I have to do everything myself (to start). I'm hoping once I get IRS approval I'll have donations to pay for professional services. Thanks!
Glad you found this helpful, SaltyMcChild. As long as your donations are normally $50,000 or less, you should be able to file the Form 990-N annually instead of Form 990-EZ. It's pretty easy to do online at the IRS website. Just search Google for "file Form 990-N"
Mary, I don't have anything right now (I'm working on it), but a nonprofit would normally use the straight line method and would capitalize and depreciate items that are expected to have a useful life of more than one year and a value of more than $200. The only case where you'd use an accelerated method would be if you were allocating depreciation to some type of unrelated business income being reported on a 990-T. Many nonprofit organizations use a higher capitalization threshold. $500 is probably the most common. There is a new IRS reg that offers a safe harbor election, but it generally applies to taxable corporations or 990-T. I'd feel comfortable using $500 without an making a special election since there are no tax liability implications for a PTA. More info here on the election safe harbor (but probably way more than you need to know): www.thetaxadviser.com/issues/2014/may/clinic-story-04.html
Thanks for the great video! I do have a question that I was hoping you might address. Our church pays for the continuing education of the pastor. What would we record this under? Also, we frequently take food to the homes of sick or recently alleviated people in our community. Would this just be a line as other, "food for people in the community"?
Thank you so much for actually giving some good examples, and for commenting on the stipends question. I have been searching for that exact answer for a small school NP !
quick question, a school PTA booster 501 c 3. For field trips, where you organize an outing, parents pay a donation for the cost of the tickets to the booster (usually the exact price of the ticket, although some do round up and give more money than the ticket cost on occasion), and the booster books the tickets at a group rate. Students can apply for scholarships to be paid for by the booster but many parents pay for their kid's ticket. The money coming in: would this be line 2, as the expectation is that they will receive an item of same value back, or is it still classed as a contribution? If this money was to be classed as a contribution though, it would be Line 1 and but not line 6 b-d
And if the PTA did give the child a free or part free ticket, the cost of what the booster paid for the ticket not covered by the child's family would go under line L10 as a Grant or other similar? The overall cost of the tickets or field trip would be on schedule O, in a sentence similar to what's shown on the video, and on Line 16 other expenses?
Seems like such a gray area as yes we raise the money via parent donations, but its not what i would consider a fundraiser in the general scope of things, more a special event.
We are one of several small charter schools under an umbrella booster club so all can claim the NP status and be legit. Thank you
If you are charging a parent $50 for a ticket, and the parent pays $50, the $50 goes on line 2. If the parent pays $60, then $50 goes on line 2 and $10 goes on line 1 as a contribution. A field trip is a program service event, not a fundraiser, so it doesn't appear on line 6 at all, even if it does generate some contributions. The total cost of the tickets paid by the booster goes on line 16 as a program service expense. You can mention in Part III, line 28 something to the effect that "The booster provided 8 tickets with a value of $50 each to students who could not otherwise afford to attend the field trip." Alternatively, you could split the cost of the tickets between line 10 and line 16 by showing the cost of the "scholarship tickets" as a grant or similar amount on line 10. I personally prefer the first method. For instance, if you took all the students out for a hamburger on the way home for the field trip and paid for it with general contributions, it would not be considered a grant, so I'm not sure the free tickets should be considered a grant. But either way would be acceptable so don't overthink it.
Your videos are so helpful! I have a couple questions. If an organization provided fee-waived and sliding scale services for indigent individuals, would that reduction in cost be counted as an expense in line 10? Or would just the expenses incurred by the organization for that service go on line?
If you are waiving fees or reducing the fees for services, this shows up in the revenue section as less revenue. That's it. You are just reporting less revenue than you would have if you had not waived the fees. A reduction in fees is not an expense. If you want to disclose the amount of fee waivers or reductions, you can do that on page 2 of the 990-EZ, Part III, line 28, as part of the description of program service accomplishments. Example: "The organization's fee-waiver and sliding scale fees for services resulted in fee reductions totaling $35,000 during the year. Contributions received helped cover costs incurred to provide the services."
This video was excellent! Where do you record a board member expense that was reimbursed to the board member? I wasn't sure if you meant it should be under salaries, or other compensation? Thanks!
You have to be careful when discussing "reimbursements" to a board member or officer. It has to be clear that it is not a reimbursement of personal expenses incurred by the board member. So, I'm assuming that the board member paid for some expense, like office supplies, on behalf of the organization, and now the organization is paying him/her back. That's fine. This type of reimbursement is not compensation at all. If it was for office expenses paid for by the board member, show it on line 16 as "office expenses." Show it on the expense line category where it belongs, based on the type of expense it was for. If it was for postage, show it on line 15. You don't need to label it "reimbursement." Just call it office expenses, or whatever the type of expense was reimbursed.
Thank you! It was actually the board member being reimbursed for travel expenses for a board meeting. I contacted the IRS, because I just needed to be sure. It was less than $100.
Great video, but quick question for Stipends given to members of the organization and gift cards or prizes as well as volunteer expense is that reported under line 12?
Yes, I'd probably put it on line 12. Reimbursements to volunteers should be shown on whatever line corresponds to the type of expense that was reimbursed. If you reimbursed a volunteer for mileage driven, I'd call it transportation expense and put it on line 16. An expense reimbursement is not compensation.
Thanks for the great video! I do have a question that I was hoping you might address. Our church pays for the continuing education of the pastor. What would we record this under? Also, we frequently take food to the homes of sick or recently alleviated people in our community. Would this just be a line as other, "food for people in the community"?
Video is great. It is very helpful for someone like me, who has never completed a Form 990/Form 990 EZ. I have a question, on what line would I include internet access expense?
It could either go on line 14 or line 16. Usually, if there are rent and utilities expenses on line 14, I may lump internet access in with those expenses. Otherwise I just put it on line 16.
Thank you for being so very practical. Please help me to understand, If I am running my non-profit out of my home office, do I list utilities, etc on line 14, or do I list it on my personal income tax 1040 from my day job? Also, am I understanding clearly that the schedule O is only needed if it is over $5000?
Schedule O is mandatory for the 990-EZ and the 990. It sounds like you are referring to whether to list line 10 grants on Schedule O. If no one received $5K or more and is not required to be listed on Schedule O, find something else to put on schedule O. Usually all returns will show a listing of line 16 other expenses on Schedule O, if nothing else. Your nonprofit is a separate legal entity. It is not like a Schedule C business. If you are charging the nonprofit rent for the use of your home office, it will be an expense for the nonprofit corp and taxable income to you on Form 1040 schedule E. If you are providing the office space at no charge to the nonprofit, since it is not considered your "trade or business," there would be no home office deduction. If you are providing services to the nonprofit and the nonprofit is paying you as an independent contractor, when you report the income on your Form 1040 schedule C, you could take a home office deduction against your self-employment income. You have to be careful with that because an officer of a nonprofit is usually considered an employee, not an independent contractor, and should be receiving a W-2. Most small nonprofits pay officers as independent contractors, but in most cases this is not correct. If your nonprofit is a private foundation rather than a public charity, you should not have any financial transactions with the foundation at all. I'm assuming yours is probably a public charity, but I don't know.
Also, please be aware that the 990-EZ must be filed electronically. The IRS no longer accepts paper returns.
@@NonprofitTaxHelp very small school booster class, do you happen to know how to file electronically for free? Usually i would use the free turbo tax for personal stuff, but that seems to not be an option for the 990 ez. We have a lot of field trips that are paid by parents through the booster so took us over the $50,000.
@@DianeSterling-e3v efile.form990.org/
Note: I'm not specifically endorsing or recommending that free e-file service. Just making you aware of it.
Thank you! Do you report the Statement of Functional expenses on Schedule O broken up between Program/Admin/Fundraising?
u That's one of the things that makes the 990-EZ much simpler than the full 990--it has no statement of functional expenses. It is not required to provide a breakout between program/admin/FR on the 990-EZ. However, you can add any explanation you like to Schedule O. Total expenses are shown on page 1, line 17 of the 990-EZ. If someone wants to know how much of that was spent directly on programs, they have to go to page 2, Part III, lines 28 through 32. You can add any type of explanation to Schedule O, so feel free to list all the program expense line items on Schedule O if you want to. You could also disclose fundraising expenses on Schedule O, since they are not specifically disclosed on the 990-EZ.
Very informative. I do have a question about the professional fees - if a PTA org paid a fundraising company a $2000 fee to handle their fundraising project, the organization is required to send a 1099 Misc ?
If the fundraising company is a corporation (either "C" or "S" corp, or an LLC that has elected to be taxed as a corp) then the PTA would not have to send a 1099-MISC. Otherwise, yes. If the fundraising company is a sole proprietorship, a partnership, or single-member LLC, you would need to send a 1099-MISC. However, there is no prohibition on sending a 1099-MISC to a corporation if you want to.
This is Great information. Thank you so much! I really appreciate it. I'm starting a local food bank and have no money so I have to do everything myself (to start). I'm hoping once I get IRS approval I'll have donations to pay for professional services. Thanks!
Glad you found this helpful, SaltyMcChild. As long as your donations are normally $50,000 or less, you should be able to file the Form 990-N annually instead of Form 990-EZ. It's pretty easy to do online at the IRS website. Just search Google for "file Form 990-N"
Do you have any tutorials that specifically includes depreciation?
Mary, I don't have anything right now (I'm working on it), but a nonprofit would normally use the straight line method and would capitalize and depreciate items that are expected to have a useful life of more than one year and a value of more than $200. The only case where you'd use an accelerated method would be if you were allocating depreciation to some type of unrelated business income being reported on a 990-T. Many nonprofit organizations use a higher capitalization threshold. $500 is probably the most common. There is a new IRS reg that offers a safe harbor election, but it generally applies to taxable corporations or 990-T. I'd feel comfortable using $500 without an making a special election since there are no tax liability implications for a PTA. More info here on the election safe harbor (but probably way more than you need to know): www.thetaxadviser.com/issues/2014/may/clinic-story-04.html
We would like to have our financials audited, do you provide those services?
No, I don't perform any type of audit work.
Thanks for the great video! I do have a question that I was hoping you might address. Our church pays for the continuing education of the pastor. What would we record this under? Also, we frequently take food to the homes of sick or recently alleviated people in our community. Would this just be a line as other, "food for people in the community"?