Article Guide
When navigating the complex landscape of tax forms for non-profit organizations, understanding the IRS Schedule O, attached to Form 990 or 990-EZ, is crucial for maintaining transparency and compliance. This essential document provides a narrative that supplements the financial data contained in the primary tax forms, allowing organizations to explain their mission, activities, and operational strategies more thoroughly. Schedule O affords tax-exempt entities an opportunity to outline the details of their programs, boasting key accomplishments and highlighting how they fulfill their charitable purposes. By offering insights into governance structures and the allocation of resources, this form not only aids the IRS in evaluating compliance but also enhances public trust in the organization. In a competitive funding landscape, non-profits can leverage the detailed narrative of Schedule O to attract donors and stakeholders, showcasing their impact and commitment to service. As such, this form becomes an indispensable tool for any organization striving for transparency and efficacy in its mission-driven work.
Form Sample
SCHEDULE O |
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Supplemental Information to Form 990 or |
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OMB No. |
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(Form 990 or |
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Complete to provide information for responses to specific questions on |
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2020 |
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Form 990 or |
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Department of the Treasury |
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Attach to Form 990 or |
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Open to Public |
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Internal Revenue Service |
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Go to www.irs.gov/Form990 for the latest information. |
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Inspection |
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Name of the organization |
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Employer identification number |
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For Paperwork Reduction Act Notice, see the Instructions for Form 990 or |
Cat. No. 51056K |
Schedule O (Form 990 or |
Schedule O (Form 990 or
Name of the organization
Page 2
Employer identification number
Schedule O (Form 990 or
Schedule O (Form 990 or |
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General Instructions
Section references are to the Internal Revenue Code unless otherwise noted.
Future developments. For the latest information about developments related to Schedule O (Form 990 or
Purpose of Schedule
An organization should use Schedule O (Form 990 or
Don’t use Schedule O to supplement responses to questions in other schedules of the Form 990 or
Who Must File
All organizations that file Form 990 and certain organizations that file Form
19.If an organization isn’t required to file Form 990 or
Specific Instructions
Use as many continuation sheets of Schedule O (Form 990 or
Complete the required information on the appropriate line of Form 990 or
Identify clearly the specific part and line(s) of Form 990 or
Late return. If the return isn’t filed by the due date (including any extension granted), attach a separate statement giving the reasons for not filing on time. Don’t use this schedule to provide the
Amended return. If the organization checked the Amended return box on Form 990, Heading, item B, or Form
990 or
Group return. If the organization answered “Yes” to Form 990, line H(a), but “No” to line H(b), use a separate
attachment to list the name, address, and EIN of each affiliated organization included in the group return. Don’t use this schedule. See the instructions for Form 990, I. Group Return.
Form 990, Parts III, V, VI, VII, IX, XI, and XII. Use Schedule O (Form 990 or
1.Part III, Statement of Program Service Accomplishments.
a.“Yes” response to line 2.
b.“Yes” response to line 3.
c.Other program services on line 4d.
2.Part V, Statements Regarding Other IRS Filings and Tax Compliance.
a.“No” response to line 3b.
b.“Yes” or “No” response to line 13a.
c.“No” response to line 14b.
3.Part VI, Governance, Management, and Disclosure.
a.Material differences in voting rights among members of the governing body in line 1a.
b.Delegation of governing board’s authority to executive committee in line 1a.
c.“Yes” responses to lines 2 through
7b.
d.“No” responses to lines 8a, 8b, and
10b.
e.“Yes” response to line 9.
f.Description of process for review of Form 990, if any, in response to line 11b.
g.“Yes” response to line 12c.
h.Description of process for determining compensation, in response to lines 15a and 15b.
i.If applicable, in response to line 18, an explanation as to why the organization checked the Other box or didn’t make any of Forms 1023, 1024,
j.Description of public disclosure of documents, in response to line 19.
4.Part VII, Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors.
a.Explain if reporting of compensation paid by a related organization is provided only for the period during which the related organization was related, not the entire calendar year ending with or within the tax year, and state the period during which the related organization was related.
b.Description of reasonable efforts undertaken to obtain information on compensation paid by related organizations, if the organization is unable to obtain such information to report in column (E).
5.Explanation for Part IX, Statement of Functional Expenses, line 11g (other fees
for services), including the type and amount of each expense included in line 11g, if the amount in Part IX, line 11g, exceeds 10% of the amount in Part IX, line 25 (total functional expenses).
6.Explanation for Part IX, Statement of Functional Expenses, line 24e (all other expenses), including the type and amount of each expense included in line 24e, if the amount on line 24e exceeds 10% of the amount in Part IX, line 25 (total functional expenses).
7.Part XI, Reconciliation of Net Assets. Explain any other changes in net assets or fund balances reported on line 9.
8.Part XII, Financial Statements and Reporting.
a.Change in accounting method or description of other accounting method used on line 1.
b.Change in committee oversight review from prior year on line 2c.
c.“No” response to line 3b.
Form
1.Part I, Revenue, Expenses, and Changes in Net Assets or Fund Balances.
a.Description of other revenue, in response to line 8.
b.List of grants and similar amounts paid, in response to line 10.
c.Description of other expenses, in response to line 16.
d.Explanation of other changes in net assets or fund balances, in response to line 20.
2.Part II, Balance Sheets.
a.Description of other assets, in response to line 24.
b.Description of total liabilities, in response to line 26.
3.Description of other program services, in response to Part III, Statement of Program Service Accomplishments, line 31.
4.Part V, Other Information.
a.“Yes” response to line 33.
b.“Yes” response to line 34.
c.Explanation of why organization didn’t report unrelated business gross income of $1,000 or more to the IRS on Form
d.“No” response to line 44d.
Other. Use Schedule O (Form 990 or
Don’t include on Schedule O F! (Form 990 or
security number(s), because this CAUTION schedule will be made available for public inspection.
Document Specifications
| Fact Name | Description |
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| Form Purpose | Schedule O provides additional information to support the claim for tax-exempt status and explains the organization's mission and activities. |
| Filing Requirement | Organizations that file IRS Form 990 or 990-EZ are required to submit Schedule O as part of their annual tax return. |
| Public Disclosure | Information reported on Schedule O is publicly accessible, ensuring transparency for donors and the public. |
| State Variations | Some states have specific forms or additional requirements related to the IRS 990 filing, governed by state tax codes and nonprofit regulations. |
Steps to Filling Out IRS Schedule O 990 or 990-EZ
After gathering the necessary information, proceed to fill out the IRS Schedule O for either Form 990 or Form 990-EZ. This document allows organizations to provide additional information about their operations and activities. Ensuring accuracy in this form is important, as it assists in conveying the organization's mission and accomplishments.
- Start by locating the correct form for your organization: Schedule O for Form 990 or Schedule O for Form 990-EZ.
- At the top of the form, enter the organization's name and Employer Identification Number (EIN), which should match what is on the main tax form.
- Provide a brief description of the organization’s mission and major activities. Keep it clear and concise.
- Include any additional narratives about the organization that may help explain its programs and initiatives.
- List any significant changes in organization activities or operations from the previous year, if applicable.
- Specify any challenges faced by the organization during the tax year, especially as they relate to its mission.
- Make sure to review the form for completeness and accuracy before submission.
- Save a copy for your records before filing it with the IRS along with the tax forms.
Completing this form accurately contributes to the transparency of your organization, helping to build trust with stakeholders and the community.
More About IRS Schedule O 990 or 990-EZ
What is IRS Schedule O for Forms 990 and 990-EZ?
IRS Schedule O is a supplemental form for the Forms 990 and 990-EZ. It provides additional information about the organization’s mission, vision, and significant activities. Nonprofits must fill out this schedule to give a clearer picture of their operations, governance, and accomplishments over the year. This helps the IRS better understand how the organization is fulfilling its charitable purposes.
Who is required to file Schedule O?
Organizations that file Form 990 or Form 990-EZ are required to submit Schedule O. This typically applies to larger tax-exempt organizations and those with gross receipts above a certain threshold. All organizations that meet this requirement must include Schedule O to provide necessary supporting information that cannot be captured on the main forms.
What information should be included in Schedule O?
Schedule O should include information about the organization’s mission, key programs, and any changes that occurred during the year. This can involve explaining how funds were used for specific programs, detailing any governance changes, or discussing future plans. The goal is to communicate clearly how the organization operates and impacts the community it serves.
How is Schedule O different from the main Form 990 or 990-EZ?
While Form 990 and 990-EZ provide financial details and general information about the organization, Schedule O focuses on narrative descriptions. Forms 990 and 990-EZ report financial status, income, and expenses, whereas Schedule O elaborates on qualitative aspects such as mission, achievements, and future objectives. Together, they offer a complete overview of the organization’s health and impact.
Where can I find instructions for completing Schedule O?
Instructions for completing Schedule O can be found on the IRS website or in the instructions that accompany Forms 990 and 990-EZ. There, you will find details about what specific information to include, as well as formatting guidelines. Organizations should carefully review the instructions to ensure they meet all requirements when completing this important document.
Common mistakes
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Failure to provide complete responses. Many organizations do not answer all questions completely, which can lead to delays or denial of tax-exempt status.
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Inaccurate financial data. Errors in income, expenses, or net assets can raise red flags. Care must be taken to ensure all figures are correct.
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Not adhering to the filing deadlines. Each form has specific due dates. Missing these deadlines can result in penalties.
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Neglecting to update information. Organizations must update their Schedule O when major changes occur, such as changes in leadership or mission.
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Inadequate explanation of activities. Forms may lack detail about the organization's programs and services, which are crucial for demonstrating public benefit.
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Misunderstanding the public support test. Organizations may not correctly assess their income sources which determine their public support status.
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Failing to include all required attachments. Important documents, like financial statements or governance policies, need to accompany the main form.
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Incorrect classification of expenses. Misclassifying expenses can misrepresent the organization's financial situation and affect public support calculations.
Documents used along the form
When filing your IRS Schedule O 990 or 990-EZ form, there are several other forms and documents that may be required or helpful to complete your application thoroughly. Each of these documents serves a specific purpose in providing additional information about the organization’s operations, finances, and compliance with tax regulations.
- Form 990: This is the full version of the annual return filed by tax-exempt organizations, providing a detailed overview of financial activities, governance, and compliance.
- Form 990-EZ: A streamlined version of Form 990, used by smaller organizations with less financial activity, that still requires comprehensive reporting.
- Form 990-N (e-Postcard): For very small tax-exempt organizations, this form helps to maintain compliance by providing basic information to the IRS without detailed financial reporting.
- Form 1023: This is the application for tax-exempt status, which organizations file with the IRS to obtain recognition as a 501(c)(3) nonprofit.
- Form 1024: Used by organizations seeking recognition as tax-exempt under classifications other than 501(c)(3), covering a variety of nonprofit structures.
- Schedule A: This supplemental form provides information on public charity status and support, critical for maintaining 501(c)(3) status.
- Schedule B: This form reports the organization’s contributors who gave over a certain amount, ensuring transparency regarding funding sources.
- Schedule C: Required for organizations that engage in lobbying activities and need to report detailed information on those efforts.
- Schedule G: This form focuses on organizations that conduct gaming activities, helping to report income and expenses from such operations.
Submitting the appropriate forms and documents along with your Schedule O 990 or 990-EZ is crucial for compliance and transparency. Each document captures specific aspects of your organization's operations, further clarifying your nonprofit's mission and activities to the IRS and the public.
Similar forms
The IRS Schedule O is a document specifically designed for organizations that file Form 990 or Form 990-EZ, where it serves to provide additional information about the organization’s mission, programs, and significant changes. A document that is somewhat similar is the Form 990-T, which is used by non-profits to report unrelated business income. Both forms require an understanding of the organization’s activities, but while Schedule O focuses on explaining the organization to the public, Form 990-T is more about tax obligations related to income that is not aligned with the organization’s primary mission.
An additional form that resembles Schedule O is the Form 1023, the Application for Recognition of Exemption. This document is utilized by organizations seeking tax-exempt status under Section 501(c)(3). Schedule O can often reference the information provided in Form 1023, elaborating on specifics of programs and the public benefit that the non-profit provides. Both documents underscore the importance of transparency and provide details that affirm the organization’s mission and operations.
The Form 990-PF is akin to Schedule O in that it is used by private foundations to detail their financial activities, distributions, and charitable purposes. Like Schedule O, Form 990-PF includes narratives that explain how the organization fulfills its charitable goals. The primary difference lies in the type of organizations that file them—public charities use Schedule O while private foundations turn to Form 990-PF.
Form 5500 also shares similarities with Schedule O. This form is essential for employee benefit plans and outlines financial conditions, investments, and operations related to plans. While Schedule O elaborates on the philanthropic and operational narrative of non-profits, Form 5500 addresses compliance and reporting for pension and health plans, emphasizing regulatory transparency.
The IRS Schedule B accompanies the Form 990 and requires organizations to report their significant contributions and grants. Like Schedule O, the purpose of Schedule B is transparency; however, it focuses on financial relationships rather than the mission and activities of the organization. Both forms work together to present a complete picture of the organization’s financial health and operational impact.
Finally, Form 990 Schedule A is a related document that helps organizations provide information regarding their public charity status. Similar to Schedule O, which offers extra detail about organizational activities, Schedule A requires entities to justify the public support they receive. Both forms highlight the importance of demonstrating an organization’s alignment with its charitable purposes and the community it serves.
Dos and Don'ts
When completing the IRS Schedule O (Form 990 or 990-EZ), it is crucial to follow some important guidelines. Here are five things you should do and five things you should avoid.
Things You Should Do:
- Read the instructions thoroughly before starting. Familiarize yourself with all the requirements.
- Provide clear and concise information about your organization’s mission and programs.
- Use specific examples to illustrate your organization’s accomplishments. This adds credibility.
- Review your entries for accuracy and completeness. Double-check all figures and statements.
- File by the deadline to avoid penalties. Timely submission is essential for compliance.
Things You Shouldn't Do:
- Do not leave any sections blank. If a section does not apply, explain why.
- Avoid using jargon or overly complex explanations. Keep your language simple and direct.
- Do not exaggerate your organization’s achievements. Represent your activities truthfully and accurately.
- Refrain from submitting the form without a proper review. Mistakes can lead to inquiries.
- Do not ignore additional schedules or attachments that may be required for your form.
Misconceptions
Many misunderstandings surround the IRS Schedule O of the Form 990 or 990-EZ. Below are some common misconceptions and the clarifications that might help clear things up:
- Schedule O is only for large organizations. This is not true. Schedule O can be used by organizations of all sizes that file either Form 990 or 990-EZ. It provides critical information about the organization’s mission and activities.
- Schedule O is optional. In reality, Schedule O is not optional. When required to file Form 990 or 990-EZ, organizations must also complete Schedule O to provide narrative explanations that clarify their financial statements and other information.
- Filing Schedule O guarantees tax-exempt status. While filling out Schedule O is important for transparency, it does not automatically secure or protect an organization’s tax-exempt status. Organizations must still comply with all IRS rules and regulations.
- Only financial information is needed on Schedule O. This is a misconception. Schedule O allows organizations to describe their mission, accomplishments, and changes during the year, giving a broader context beyond just financials.
- Schedule O can be completed quickly without much thought. In truth, completing Schedule O requires thoughtful consideration. Organizations must ensure the information is comprehensive, accurate, and reflective of their activities.
- Only the board of directors needs to review Schedule O. This isn’t the case. Stakeholders, including staff and volunteers, may also benefit from understanding the organization’s narrative on Schedule O. A collaborative approach can lead to better insights and engagement.
- Submitting Schedule O is the end of reporting obligations. This misconception overlooks the continuous nature of compliance. Organizations must remain accountable and transparent in their operations beyond just the information reflected in the Schedule O.
Key takeaways
Understanding and completing the IRS Schedule O, which accompanies the 990 or 990-EZ forms, is crucial for nonprofits. Below are key takeaways that can guide organizations through this process.
- Schedule O provides essential space for organizations to explain their mission, governance structure, and programs.
- Clearly articulate your nonprofit's purpose in a concise manner. This section often reflects an organization’s identity.
- Use Schedule O to highlight significant programs and accomplishments over the tax year, demonstrating the impact of your organization.
- Transparency is essential. Organizations should provide clear descriptions of their financial activities and any changes in operations.
- Utilize bullet points or numbered lists in Schedule O to present information neatly, making it more readable for the IRS and interested stakeholders.
- Remember to update Schedule O for any significant changes in governance, mission, or financial structure from the previous year.
- Accurate reporting helps build trust with donors and the public. Organizations should ensure their information matches other filings.
- Review examples of completed Schedule O forms from similar nonprofits to understand best practices and reporting standards.
- Consult the IRS instructions for specific questions as they provide detailed guidance for each section of the form.
- Finally, assemble your board or relevant stakeholders to review the content of Schedule O. Collaborative input can enhance clarity and accuracy.