Instructions for Filling Out Form 990-T

This comprehensive guide assists tax-exempt organizations in accurately completing Form 990-T, which is used to report unrelated business income. It includes step-by-step instructions, definitions of terms, and additional resources to help organizations navigate the process.

In this article, we'll provide information on Form 990-T and a step-by-step guide on how to fill it out, keeping it straight to the point.

What is Form 990-T?

Form 990-T, also known as the Exempt Organization Business Income Tax Return, is used by tax-exempt organizations to report and pay income tax on their unrelated business income. This includes charities, universities, retirement plans, and other tax-exempt entities. The form's primary purpose is to report unrelated business income, calculate and report unrelated business income tax liability, report proxy tax liability, claim refunds of income tax paid by regulated investment companies or real estate investment trusts, request credits for certain federal excise taxes paid, and make elective payment elections. Organizations with $1,000 or more of gross income from a regularly conducted unrelated trade or business must file Form 990-T, and those with multiple unrelated trades or businesses must compute unrelated business taxable income separately for each.

Who Must File Form 990-T?

Organizations that need to file Form 990-T include disregarded entities, domestic or foreign organizations exempt under section 501(a), section 529(a), or section 529A(a) with gross income of $1,000 or more from a regularly conducted unrelated trade or business. Additionally, colleges and universities of states and other governmental units, subsidiary corporations wholly owned by such colleges and universities, qualified tuition programs under section 529, and qualified ABLE programs under section 529A with $1,000 or more of unrelated trade or business gross income must file. Trustees for certain trusts, such as IRAs, SEP IRAs, SIMPLE IRAs, Roth IRAs, Coverdell ESAs, Archer MSAs, and HSAs, with $1,000 or more of unrelated trade or business gross income are also required to file Form 990-T.

Form 990-T Tax Filing Deadlines and Due Dates

• For trusts defined in section 401(a) and certain other entities, the due date is the 15th day of the 4th month after the end of their tax year.
• For all other organizations, the due date is the 15th day of the 5th month after the end of their tax year.
• Extensions and special rules may apply, and organizations are encouraged to review the instructions carefully to determine their specific filing requirements.

Form 990-T Late Payment Penalty

Organizations that fail to pay tax when due may be subject to interest and penalty charges. Specifically, the penalty for late payment of tax is usually 1/2 of 1% of the unpaid tax for each month or part of a month the tax is unpaid, up to a maximum of 25% of the unpaid tax.

Step-by-Step Instructions for Form 990-T

Step by step instructions for filling out Form 990-T include:

1. Introductory Material: This section provides links to the latest information about developments related to Form 990-T and its instructions, such as legislation enacted after they were published.
2. General Instructions: These instructions cover the purpose of Form 990-T, who must file, which parts to complete, when, where, and how to file, estimated tax payments, depository method of tax payment, interest and penalties, other forms that may be required, accounting methods, accounting period, reporting 990-T information on other returns, rounding off to whole dollars, and public inspection requirements of Section 501(c)(3) organizations.
3. Specific Instructions: This section provides detailed instructions for each part of Form 990-T, including how to report various types of income, deductions, and tax payments. It also includes instructions for completing Schedules A through whatever schedules are applicable, which are used to provide additional information required by the form.
4. Additional Material: This includes business activity codes, appendices with definitions, and public inspection requirements. It also provides information on how to access IRS forms and publications online, how to order them, and how to contact the IRS for help.
5. Filling Out the Form: The instructions guide organizations through filling out the form, starting with identifying information, unrelated business income, deductions, and calculating the tax owed or refund due. It also covers special situations, such as changes in accounting methods or periods, and how to handle specific types of income or expenses.
6. Attachments and Documentation: Organizations are instructed on what additional information needs to be attached to the form, such as schedules detailing specific types of income or deductions, and documentation for certain claims, such as charitable contributions.
7. Filing and Payment: The instructions detail how to file Form 990-T electronically or by mail, how to make estimated tax payments, and how to pay any tax due with the form.
8. After Filing: This section provides information on what organizations need to do after filing Form 990-T, such as keeping copies of the form and attachments for their records and how to amend the form if necessary.

How to Submit Form 990-T

To submit Form 990-T, first determine if your organization is required to file based on its activities and tax-exempt status. Next, gather information on the organization's unrelated business income, deductions, credits, and any other relevant tax information for the year. Complete Form 990-T according to the specific instructions provided for each part of the form. Finally, file Form 990-T electronically, as required for the tax year 2023, by the due date. Ensure that your organization meets the electronic filing requirements, accurately reports all unrelated business taxable income and allowable deductions, and makes any necessary estimated tax payments to avoid penalties. Keep a copy of the filed Form 990-T and all supporting documents for your organization's records and potential public inspection requirements.

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