Do You Have to File Taxes if Your Nonprofit Breaks Even?

Benjamin Franklin famously said, “nothing is certain except death and taxes.” But if your tax-exempt group breaks even, you may wonder if the tax part of that quote really applies to you. 

If you’re not sure if you need to file taxes, you’re not alone. Let’s break the answer down so you can be confident and compliant when tax time rolls around. 

What does “breaking even” mean for tax-exempt organizations? 

First things first: what does it mean to break even? Simply put, it means that your tax-exempt group spends all the money it brings in. There’s nothing left over at the end of the year.

While it’s easy to assume groups who break even are off the hook on filing taxes, that’s not the case. 

Do I need to file taxes if I break even?  

The short answer is yes. The IRS requires tax-exempt groups like yours to report your revenue for the year, even if you spent all of it. 

If you don’t meet this requirement, you risk losing your group’s tax-exempt status. Once it’s gone, it’s tough to get back. It’s just not worth the risk.

How do I file taxes for my tax-exempt group that broke even? 

The good news is, it’s fairly straightforward to file your taxes as a tax-exempt group. To stay in good standing with the IRS and keep your tax exempt status, you must file a version of Form 990 every single year.

There are a few different versions of this form. The Form 990-N (also known as the e-Postcard) is typically the version used by small tax-exempt groups with annual gross receipts under $50,000. It’s the simplest version of the Form 990 and is filed online. 

Some other versions include:

• Form 990-EZ: For medium-sized tax-exempt groups with gross receipts ranging from $50,000 to $200,000 and total assets under $500,000.
• Standard Form 990: For larger nonprofits with gross receipts over $200,000 and total assets exceeding $500,000. 
• Form 990-PF: For private foundations, regardless of gross receipts. 

Don’t just guess which version of the 990 you need to file. As a first step, look at your group’s past filings. If those aren’t readily available, visit the IRS’s website and search “Tax Exempt Organizations Search” in the upper right box. You’ll be able to find your group’s past filings and determine which form is right for your circumstances. 

Looking for help filing your Form 990-N?

Let’s face it: anything involving taxes and the IRS can feel pretty overwhelming. As a busy volunteer, you probably don’t have much spare time to sort through everything. 

The good news is, you don’t have to handle it on your own. 501c3 Center makes filing your 990-N quick and easy – no IRS account needed. Find out more and get started today.