Form 990 Refresher: How do I Report Gross Receipts?
posted Feb 23, 2018 by Patrick Martin, CPA in the Mission Matters Blog
Back in 2015, we covered the basics of gross receipts on the form 990 after receiving numerous questions on how to calculate them, how the total can affect your organization and what the requirements for filing are. Fast forward to 2018 and it’s clear that this remains an area of confusion for many nonprofit organizations. We’re here to help you navigate this confusing territory—read on for a refresher on reporting gross receipts on your IRS Form 990/990-EZ/990N.
First of all- what are gross receipts?
Gross receipts are the total amounts an organization earns in a fiscal/calendar year (including short years) from all sources without subtracting any expenses. The primary purpose of gross receipts is to mark a threshold for reporting requirements with the IRS. In addition, total gross receipts are used by many states for determining whether an audit or reviewed financial statements are required with annual state filings.
There are four different types of the form 990- Form 990, Form 990-EZ, 990-N, and 990-PF.
How do you know what form to use? Your gross receipts determine this.
- Nonprofits with gross receipts normally $50,000 or less, can submit a Form 990-N, Electronic Notice (e-Postcard) for Tax Exempt Organizations Not Required to File Form 990 or 990-EZ.
- Organizations with gross receipts under $200,000 and total net assets at the end of the tax year are under $500,000 can file 990-EZ.
- If gross receipts are over $200,000 or total net assets are over $500,000 at the end of the tax year the Form 990 must be filed.
- Form 990-PF must be filed by exempt private foundations and taxable private foundations.
If an organization has total assets of $10 million or more at the end of the tax year and files at least 250 returns of any type (i.e. Form W-2, 1099, payroll returns, etc.) during the organization's tax year, the Form 990 must be filed electronically.
Calculating gross receipts
On lines 1a through 1f, report cash and noncash amounts received as voluntary contributions, gifts, grants or other similar amounts from the general public, governmental units, foundations, and other exempt organizations.
What is included in the “general public”?
The general public includes individuals, corporations, trusts, estates, and other entities.
Voluntary contributions are payments, (or part of any payment) for which the donor does not receive full retail value (fair market value) from the recipient organization.
Contributions are reported on line 1 regardless of whether they are deductible by the contributor. The noncash portion of contributions reported on lines 1a through 1f is also reported on line 1g. Report the value of noncash contributions at the time of the donation.
For example, you would report the FMV of a donated car at the time the car was received as a donation.
Once you’ve gathered all this information, you will have the total amounts your organization received from all sources during its annual tax year end.
Are in-kind donations part of gross receipts?
Yes, in kind donations are included in gross receipts. Many organizations run into confusion with this, and aren’t sure whether to report in kind donations as contributions or gross receipts.
What kind of donations count as “in kind”?
In kind gifts are contributions of goods or services other than cash grants. They are reported on part VIII on form 990. In kind donations of services are a reconciling item between the financial statements and form 990. There are two types of in-kind donations:
- Donation of goods like equipment, inventory etc.
- Donation of services like use of facilities, advertising space or professional services.
Organizations that fail to file Form 990 are charged a penalty of $20 a day, not to exceed $10,000 or 5% of gross receipts. Organizations with annual receipts greater then $1,020,000 are charged a penalty of $100 day not exceed $51,000 for any one return. This penalty applies for each day after the due date of the return.
Questions on the form 990 and reporting gross receipts? Reach out to the KLR Not-for-Profit Team.