Friday, August 19, 2011

We have completed our financial review and decided that we might as well file our federal informational tax return at the same time.  I understand that the income levels that determined which form we file (990N, 990EZ, or 990) have changed but I’m still unclear on a couple of points.  Our revenue in previous years has generally been below $50,000, but last year one of our fundraisers was more successful than expected (Yeah!) and our revenue was slightly more than $51,000.  Does that mean we still have to file a 990EZ? 
What a great idea to file your tax return when you have all the information in front of you from the financial review—getting it completed and filed now means you won’t have to worry about meeting the November 15th deadline!  You are also correct about the revenue levels changing. 

Here are the revised levels for the 2010-11 fiscal year:
  • Revenue less than $50,000, file the 990N
  • Revenue $50,000 to $200,000, file the 990EZ
  • Revenue more than $200,000, file the 990.

Now to answer your questions, keep a couple of things in mind.  First, remember that when you compute your PTA’s revenue for the purpose of the IRS filing, you can deduct that portion of your dues that is forwarded to your council, the state and National PTA.  Second, the form that should be used is based on the PTA’s ‘normal’ level of revenue, not necessarily the actual income for the particular year.  To determine the ‘normal’ level you average the year in question plus the previous two years.  Thus to determine the appropriate form for 2010-11, you would average the revenue for 2008-9, 2009-10 and 2010-11.  If the average for all three is less than $50,000 your PTA can file the 990N electronic postcard; if the average is higher, your PTA should file the 990 EZ for the 2010-11 fiscal year, even though your revenue for that year may have been slightly more than $50,000.  Finally remember even if your PTA is eligible to file the 990N, you have the option of filing a 990EZ, but heed the IRS’ caution here.