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IRS Form 990 Filing Requirements for Schools- Updated April 18, 2022 - 8.00 AM - Admin, ExpressTaxExempt
IRS recognizes the Schools 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 Schools, applying for a tax-exempt status, filing requirements, and more.
Table of Content
1. What is 501(c)(3) School?
Schools are considered non-profit organizations as their main goal is to operate for an educational purpose. Since the schools serve a charitable purpose they are considered as section 501(c)(3) organizations. Usually, these schools are described under section 170(b)(1)(A)(ii) of the IRS. The primary purpose of the organizations described under this section is to present formal instructions.
The schools are required to have and maintain a regular facility and curriculum. It is also necessary for these organizations to regularly enroll a group of students in attendance at the place where its educational activities are regularly carried on. All the federal, state, and public schools that meet these requirements fall under section 170(b)(1)(A)(ii). The term “school” here represents all the educational organizations that are described in this section. But if a school is operated by a museum, only the school is considered as an educational organization and not the museum.
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2. Examples of School
According to the IRS, the term school includes all educational organizations that follow the requirements of section 170(b)(1)(A)(ii). Some of these organizations are:
1. Federal Schools.
2. State Schools.
3. Public Schools.
4. Colleges and universities.
5. Preparatory Schools and High Schools.
6. All other instructional institutions.
3. Unique Non-Profit activities
The primary purpose of a school must be to operate for an educational function or to offer formal instructions. Organizations whose primary purpose is medical research, collection of a particular element, or any other function and the secondary purpose is an educational activity then the organization does not qualify as an educational organization under section 170(b)(1)(A)(ii). Since schools are considered public charities, they must meet the requirements of section 501(c)(3).
For a school to be considered as a public charity under section 501(c)(3), and to be mentioned as an educational organization under section 170(b)(1)(A)(ii), it has to adopt a racially nondiscriminatory policy and operate in accordance to it. The main objective of a racially nondiscriminatory policy is to provide equal rights and privileges made available to the school to all the students irrespective of their race. This policy should be followed for all the operations of the school including admissions, scholarships, athletics, and all the other programs.
4. 990 Filing requirements for Schools
Schools are considered as public charities under section 501(c)(3) and are required to file the Form 990 series on an annual basis. The school has to file Form 1023 with the IRS for it to be eligible for the tax-exempt status. They are required to file the Form 990 series to retain their tax-exempt status every year.
The organizations have to file their Form 990 based on their gross receipts:
Schools 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. Schools 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.
Schools whose gross receipts are less than $200,000 and total assets less than $500,000 at the end of the taxable year are supposed to file Form 990-EZ. The schools are required to attach a Schedule E along with their Form 990-EZ report on the policies, benefits, and resources of their school. They are also required to attach a Schedule A to describe their public charity status.
Schools 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 schools are required to attach a Schedule E along with their Form 990 report on the policies, benefits, and resources of their school. They are also required to attach a Schedule A to describe their public charity status.
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