What 501(c)(3) PTA need to know about Form 990 Filing?
An Overview of Parents Teacher Associations and IRS Form 990 Filing Requirements for
- Updated August 18, 2022 - 5.00 PM Admin, ExpressTaxExempt
IRS recognizes the Parents Teacher Association under the section 501(c)(3) as tax-exempt. This type of Organization does not pay income tax on its earnings or on the donations it receives. But the Organizations need to file the activities of the Organization with the IRS.
This article further explores the requirements for activities of the PTAs, applying for a tax-exempt status, filing requirements, and more.
1. What is PTA?
Parent-Teacher Association (PTA) or Parent Teacher Organization is a formal school-based organization whose purpose is to intend parental participation in schools and to make schools a better place for the students. The PTAs usually consist of teachers and the parents of the students who work together to raise funds for school supplies and other charitable operations for the school.
PTAs are generally classified as public charities and therefore are exempted from taxes under section 501(c)(3) of the IRS. Just like every other public charity, the main goal of the PTAs should be to serve for a charitable, educational, or scientific purpose. For a PTA to remain tax-exempt under section 501(c)(3), it must meet the requirements of this section under the IRS.
Membership in a PTA organization can be obtained by any person who is willing to serve and volunteer for the education, health, and welfare of the students.
2. Examples of IRS considered PTA’s
The PTAs in the United States are local organizations which are a part of the National PTA, a not for profit organization in Alexandria, Virginia. There is also a PTA operating separately for each state in the United States. These PTAs are also a part of the National PTA.
Almost all the public and private schools have a PTA that works exclusively for the welfare of the students. These organizations are usually present in elementary and middle schools but not as much in pre-schools and high schools.
3. 501(c)(3) Tax Exemption for PTA
A PTA is a charitable organization, and it must meet the requirements of section 501(c)(3) of the IRS to be exempted from paying tax. The funds and the income produced by the PTA should be used only for charitable purposes and should not be used for a private purpose of an officer or a director. All section 501(c)(3) organizations are prohibited from participating in political activities and taking part in political campaigns. Only a limited amount of funds should be distributed for the lobbying activities.
The primary purpose of a PTA should be a charitable, educational, or scientific purpose. The PTAs usually operate for the welfare of the children and youth. When a PTA is dissolved or going out of business, its assets must be distributed only to the purposes which define an organization as tax-exempt.
Members of the PTA are usually required to pay a membership fee. This fee will be reimbursed to the member in the form of expenses such as commutation, accommodation, food, and telephone charges which will be taken care of by the PTA. The member has the option of donating the remaining of his membership fees as a contribution to the organization.
4. 990 Filing requirements for Parents Teacher Associations
A PTA is considered as a public charity and needs to be approved by the IRS under section 501(c)(3) to file the Form 990 series. An organization has to file Form 1023 with the IRS for it to be eligible for the tax-exempt status. The organization will receive a determination letter from the IRS which recognizes its tax-exempt status. The organization has to be operated exclusively for its tax-exempt purposes.
The filing of Form 990 depends upon the gross receipts of the PTA:
PTAs that have gross receipts of $50,000 or less can file a Form 990-N
(e-Postcard) if they choose not to file Form 990 or Form 990-PF. PTAs whose gross receipts vary from year to year can file a Form 990-N if the average of their gross receipts is $50,000 or less for the previous three consecutive years.
Tax-exempt charitable organizations whose gross receipts are equal to or higher than $200,000 and total assets equal to or greater than $500,000 at the end of the taxable year are supposed to file Form 990. The PTAs are required to attach a Schedule A along with their Form 990 to describe their public charity status.
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