990 Season Survival Guide: Tax Tips

November 21, 2025

By: Diana Miller

Partner, Assurance

Key Takeaways

Form 990 filing deadlines are unforgiving: Miss the fifth month after your fiscal year ends, and the IRS will start sending love letters (the bad kind)
Three strikes and you’re out: Fail to file for three consecutive years and kiss your tax-exempt status goodbye
Documentation today saves explanations tomorrow: The board meeting minutes you skip now become the audit nightmare you live later
Bottom Line: Start your 990 prep in Q3, not the week before your filing deadline—your future self will thank you

990 compliance doesn’t have to be the organizational equivalent of a root canal. With the right prep work and a few strategic moves, you can turn this annual obligation into a manageable part of your nonprofit’s operations.

Why Your 990 Deserves More Respect Than It Gets

Think of Form 990 as your nonprofit’s annual report card—one that is sent to the IRS, posted publicly, and scrutinized by donors, journalists, and board members.

The 990 isn’t just a tax form. It’s your nonprofit’s most visible financial disclosure. Donors may review a nonprofit’s 990 before making giving decisions.

Organizations that fail to file for three consecutive years automatically lose their 501(c)(3) status.

The Year-End Compliance Checklist (aka: Start This Yesterday)

Here are your to dos.

Financial Housekeeping That Actually Matters

Get your books closed. By the end of your fiscal year, every transaction should be recorded, reconciled, and categorized correctly. Your future accountant (or current accountant who you want to stay on good terms with) will appreciate not having to reverse-engineer six months of mystery transactions.

Run your functional expense reports. The IRS wants to see how you’re spending money broken down by program, management, and fundraising. If you’re scrambling to categorize expenses in April because nobody tracked this monthly, you’re doing it wrong. Set up proper expense allocation in your accounting system now, and let it run automatically throughout the year.

Reconcile your restricted vs. unrestricted funds. Donor restrictions aren’t suggestions—they’re legally binding. Make sure your accounting reflects reality, not wishful thinking. That grant for youth programs can’t magically become general operating support just because you need it to.

Documentation

Board meeting minutes are your best friend. Did you approve the executive director’s compensation? Adopt a conflict of interest policy? Make any significant program changes? If it’s not in the minutes, it didn’t happen (according to the IRS, anyway).

Update your governance policies. The 990 asks pointed questions about your conflict of interest policy, whistleblower policy, and document retention procedures. If your answer to “Do you have these?” is “I think so?” or “Does an email chain count?”—now’s the time to fix that.

Gather your compensation data early. For every officer, director, key employee, and highest-compensated staff member, you’ll need to report total compensation—including benefits, bonuses, and deferred comp. Waiting until May to ask your payroll provider for this data is like waiting until December 24th to start Christmas shopping. Technically possible, but why do that to yourself?

The Most Common 990 Mistakes (That You’re Probably Making Right Now)

Let’s talk through a few danger zones.

Underreporting Related Party Transactions

If your executive director’s spouse provides consulting services, that’s a related party transaction. If three board members work at the same law firm that represents your nonprofit, that’s reportable. If your founder started another nonprofit and you share office space, guess what? The IRS cares about that, too.

Related party transactions aren’t illegal—but not disclosing them definitely is. According to AICPA data, related party disclosure issues are among the top five reasons nonprofits face IRS inquiries.

Treating Schedule A Like Optional Homework

Schedule A (Public Charity Status and Public Support) determines whether you’re actually a public charity or if you’re sliding into private foundation territory. Get this wrong, and you might wake up one day subject to excise taxes, distribution requirements, and a whole new world of compliance headaches.

The public support test is mathematical, but it’s not simple. If more than one-third of your support comes from grants, contributions, and program revenue (with some important limitations), you’re probably fine. If not, you need to look at the facts and circumstances test—and that’s where things get interesting (translation: complicated).

Playing Fast and Loose with Program Service Descriptions

“We help people” is not an adequate program service description. Neither is copying last year’s narrative and changing the date. The IRS wants specifics: who you served, how many people you reached, what activities you conducted, and what you accomplished.

Think of this section as your chance to delineate your mission—with numbers. Donors and grantmakers read this. Make it count.

Strategic Moves That Separate Good Nonprofits from Great Ones

Implement monthly financial reviews. Don’t wait for year-end to discover your bookkeeper’s been categorizing everything to “miscellaneous expenses” for eight months. Monthly reviews catch errors when they’re small and fixable.

Build a 990 prep calendar starting in Q3. Map out when you’ll gather compensation data, close out restricted grants, finalize program statistics, and draft narrative sections. Spreading this work across three months is infinitely more pleasant than cramming it into three weeks.

Consider a Form 990 dry run. Have your accountant or tax advisor do a preliminary review in Q4 using year-to-date numbers. You’ll identify missing documentation, unclear transactions, and potential red flags while there’s still time to fix them.

When DIY Goes Wrong (aka: The Case for Professional Help)

If your annual revenue exceeds $250,000, you’re likely not equipped to handle this on your own. The 990 has gotten increasingly complex, with new reporting requirements added regularly. The IRS instructions alone are 103 pages.

Professional tax advisors who specialize in nonprofits stay current with IRS guidance, understand sector-specific nuances, and know which Schedule questions are landmines that require careful navigation. They’ve also seen every possible mistake, which means they’re very good at preventing you from making those mistakes.

What’s more, a well-prepared 990 can actually be a fundraising tool. Sophisticated donors look at your functional expense ratios, governance practices, and program descriptions.

Your Action Plan (Starting Right Now)

Close out your fiscal year cleanly—reconcile everything, categorize properly, and document thoroughly. Schedule a preliminary review with your tax advisor for two months before your filing deadline. Update all governance policies and ensure the current versions are on file.

Ready to Stop Stressing About Your 990?

At Wiss, we’ve been helping nonprofits navigate tax compliance for decades.

Our nonprofit tax team doesn’t just fill out forms—we help you understand what your 990 reveals about your organization’s financial health, identify areas for improvement, and ensure you’re positioned for long-term success. Because nonprofit accounting should support your mission, not distract from it.

Let’s talk about your 990 strategy. Contact our nonprofit tax specialists to schedule a consultation—before year-end chaos sets in.