What are Gross Receipts on the Form 990?
posted Jul 2, 2015 by Sandy Ross, CPA, CFE in the Mission Matters Blog
I recently presented a seminar on Nonprofit Financial Management Priorities and received numerous questions regarding gross receipts, more specifically how to calculate them, how the total can effect your organization and what the requirements for filing are. The IRS has a very specific calculation for gross receipts which is different from what is typically seen on a profit and loss or income statement. The confusion starts with the word "gross" which leads you to believe it includes all revenue. Let's take a closer look at why gross receipts are important to your organization when filing your IRS Form 990/990-EZ/990N.
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.
Calculating Your Organization’s Gross Receipts
To calculate your gross receipts on Form 990 (Part VIII of the form), add (column A) of the following lines:
- Rental expenses, 6b
- Cost or other basis of sales of assets sold, 7b
- Direct expenses from fundraising events, 8b
- Direct expenses from gaming activities, 9b
- Inventory cost of goods sold, 10b
- Total revenue, 12
For Form 990-EZ (part I of the form), add lines:
- Cost or other basis of sales of assets sold, 5b
- Direct expenses from gaming and fundraising events, 6c and
- Inventory cost of goods sold, 7b
- Total revenue, 9
Donated goods and materials are included in gross receipts but donated services are not included. Another thing to keep in mind is that the investment income does not include unrealized gains and losses which is where most errors happen in the calculation.
What are the requirements for filing?
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 assets under $500,000 can file 990-EZ. If gross receipts are over $200,000 and over $500,000 the Form 990 must be filed.
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 calendar year ending with or within the organization's tax year, the Form 990 must be filed electronically.
The due date for the Form 990/990-EZ/990-N is the 15th day of the 5th month after the organization's fiscal/calendar year ends. The Organization can file up to two extensions of three months each. If the due date falls on a weekend or legal holiday, file on the next business day.
Questions regarding gross receipts and filing requirements? Contact any member of our Not-for-Profit Services Team.