501c3 Filings Confuse Even Established Nonprofits
New and established nonprofits alike face significant hurdles in navigating the complex process of obtaining and maintaining their 501(c)(3) status. This includes challenges with IRS filings (like the 990), state registrations, understanding reporting requirements, and even basic recognition, leading to frustration, delays, and uncertainty about future funding. Many lack experience and feel overwhelmed by the process.
SOURCES (60)
“In before this gets locked. First you can't really do this via DAF to the best of my knowledge except if you find a 501(c)3 that does this and put it in the notes field and hope they follow it. As for a private foundation…”
“I am an executive for a nonprofit run by high school students. The previous executives, who ran the club for the last two years and have since graduated, did not file Form 990-N for the tax years 2023 and 2024. I am filing for the tax year 2025, and Form 990-N is due by October 15 since our tax year ends on May 30. Do I also need to file Form 990-N for 2023 and 2024, or is one filing enough to stop us from losing nonprofit status? submitted by /u/ohnomyusernameiscuto [link] [co”
“You can’t really eat the taxes… the best you can do is “gross up” the taxes for your employees but it’s gonna impact their gross taxable income; if each suit is roughly $2k, it’s gonna cost you the 30k + cost of taxes… if they are attorneys, the extra $2k or whatever probably isn’t that big of a deal. Now, I think it’s absolutely wonderful that you are looking to pay for suits for your employees. May I recommend before you move forward, that you slow down just a bit and get together a small grou”
“I host an annual fundraiser that raises money for a charity bike ride. In prior years I have accepted donations for entry and raffle tickets and then held it to donate when the bike ride has match days and to double the donation via my employer match. Because of this structure, my donors have not been able to get receipts for their often quite generous donations. Is it ethical and or smart to create a new non profit to use for this annual event? I am approaching $100,000 funds raised for the par”
“Hi, we're a small California 501(c)3, in need of a recommendation for an accountant to do our 990EZ and CA state filings, before Nov. 15. Remote preferred. We want someone who's comfortable filing for nonprofits. TIA. submitted by /u/okletstryit26 [link] [comments]”
“Yep, they all also only have physical copies of everything and dont know how scanners work. Its easier for me just to have the PO box open.”
Thank u so much, will read it and come back with questions
“Is there any advantages of using this vs like a normal PO box. Im a bit old school, if I can go to the post office in person and sign up for a physical one id rather do that”
“Did you read the instructions? Everything you need to know is right there on the form. The worksheet for calculating allowances in in the middle of the first page. The instructions for "exempt" are on page 2. You almost certainly will not be itemizing deductions. You probably won't have any adjustments to income. And you already said you don't have any other income. So the result of the allowances worksheet is almost certainly zero. In any case, the point of allowances is to re”
“Sort of. The base is the same- follow the schedule C, and adapt as needed. Obviously a non profit is going to have vastly different needs compared to a pizza shop”
Thank you, bad on me for not thoroughly reading before responding.
“How does the new limit of 1% of AGI on the deductibility of charitable deduction on Schedule A work? Is it in total, per donee or a deduction of amounts in excess? The last time I looked at it I came away convinced it was per donee.”
“Have you spoken to any other musician who has been the recipient of this kind of arrangement, or a CPA specializing in performing arts? Very frequently the item is given to a non-profit (tax deductible) which then loans it to the musician with full paperwork and good lord don't forget the insurance. I'm pretty sure there are Stradivarii wandering the world under this arrangement. Please don't re-invent the wheel, do as much research as you can.”
“I ask because a charity is donating a vehicle to itself. I wonder if the IRS prohibits this. The owner on the pink slip is the charity organization. This also is in CA. submitted by /u/blue2lips [link] [comments]”
“Yes I’ve done a lot of reading up on what counts as qualified and what does. With the information I have read, I am 100% certain that our tips fall under the category of qualified.”
“ah yes thanks, I worded #3 imprecisely! And indeed, if there are more complex questions about educational expenses, taxable scholarship income, etc. for purposes of the AOC or if things are potentially on the bubble about whether the student provided more than half their own support or not, or whether the parents have straightforwardly maxed out educational expenses for the AOC or not with payment by cash or student loan, that kind of student-parent info-sharing would be helpful to get clarity.”
“This is more of a venting session. I’m attempting to open a bank account for my son’s school’s volunteer group (PTO) to raise funds and cover event expenses. I’ve already created the EIN, by laws, meeting minutes, but I made an error in printing the correct form. Consequently, I’m currently stuck in a limbo situation because the EIN hasn’t been populated by the IRS yet, preventing me from accessing the website. On the other hand, the IRS is not responding to phone. 😕 submitted by /u”
“the 1099 is the income that is taxable. You have to match that number on schedule 1. If the FMV is lower, that would then be a negative adjustment on schedule 1 as well. Depending on the difference it may not be worth the audit risk”
“I work for a non-for-profit and we have a scholarship fund that goes to cover the cost of one of the areas for our business. Money is donated and recorded under that scholarship income account. I just learn that our accountant was making an end of year journal entry to move funds from our income account to that expense account. So, lets call the income account 1500 and the expense account 4000. The accountant debit account 1500 and credited account 4000, simultaneously reducing income and expens”
“I agree though as someone who had a career while uncredentialed, the reason i didn't get one was because i had too much work and didn't want more. Now that i left tax i am getting it because i have the capacity and it definitely ads credibility.”
“The $40k number may or may not be right, but I definitely wouldn’t treat a QuickBooks estimate like it’s a tax bill and just send the money without having someone actually model this. You really need somebody to look at how the LLC is taxed, how the Kickstarter funds should be recognized, what you’ve already spent and what you expect to spend developing the game this year. That’s especially important for a videogame because the tax treatment of domestic software development expenses changed pret”
“Good Morning, could someone let me know the process of filing this form? Do I submit it online with the new evidence or do I have to submit online and do something else with the new evidence? We were denied but recently found some new evidence to support our case; our options are refilling for a new card or reopening; was weighing options and figured it’s best to just reopen as one thing was missing. submitted by /u/Horse-Peepee [link] [comments]”
“Are accounts who will work with a small non-profit all terrible, or have we just had bad luck? Or maybe we haven't been looking / choosing in the right way.... Any advice on how to find a good accountant who will be responsive to our messages would be extremely helpful. I know there must be more lucrative clients out there than a small non-profit, but still... there have to be some people or firms out there who will still do quality work! For context, I'm looking for a help for a 501c3 n”
“The issue I am having though is if i hire someone its likely going to cost me more than if I just had to pay the NCDOR, so that is where I am at. I can prove 90% of everything that they are requesting. After this is resolved I am literally closing the business as with my health I can no longer do it. I was ironically going to close the LLC this month and then i got this in the mail yesterday. My question is am i better off just paying them for the 10% i cant prove if they make me since the busin”
“I'm fully in agreement and this will be the approach I will be implementing in this situation. Thank you, you've done a great job breaking this down and I greatly appreciate your response!”
“Missing the Wyoming annual report is fixable and cheap if you move now; it is not fixable cheaply if you wait for the state to dissolve the entity. Wyoming's report is due on the first day of your anniversary month, with a $60 minimum license tax (as of 2026-09-01), and having no income does not change that; the tax is on in-state assets, not revenue. File the overdue report on the Wyoming Secretary of State site today and pay the $60 plus whatever late amount the portal shows. Then set a re”
“Honestly I don’t know. I’m trying to help someone else and we’re looking at these bits and pieces of information and it’s just very confusing.”
“This was asked 6 years ago, but I wondered if there is any new software or online sites. We are a small non-profit; last year we filed online via IRS, but now we are having problems. In talking with IRS, they are saying we have to use a preferred provider (?). When I googled one of the providers, it had very low trustworthy numbers. I know this is not always indicative of the site, but I wanted to see if anyone had personal experience with a site or software so I can efile. submitted by &#”
I just received this email from them, and I wasn't clear on what it meant.
“Not sure what to do with this information or if I can post this here.. the non profit sports organization I am affiliated with is showing that its charitable organization status has been revoked citing past due. The entity status letter shows they are not in good standing with the franchise tax board. I’m seeing form 990 was last filed roughly 5 years ago. Nothing since. There was no board turnover. It was the same treasurer throughout this period of time. It still says on their website that spo”
“"I can't see any benefit for an unprofitable business to count them as donations and have them vanish into thin air" You can't pick and choose how to classify things based on what gives you the most tax benefit. It has to be based on the underlying facts. Your bookkeeper gave you bad advice. The law is fairly clear in this situation: If the business just has its name and logo published, the IRS does not consider that to be a “substantial return benefit” and does not consider it”
“i’d be careful with this tbh, going exempt now just sounds like pushing the tax bill to later.”
“Here’s some guidance on classifying it as advertising vs charitable contributions. It’s unlikely that your contribution is an advertising expense https://www.thetaxadviser.com/issues/2017/oct/charitable-contributions-businesses/ For the expense to be classified as an advertising expense, the business needs to substantiate that it received something in return (a direct benefit), so the cost can be classified as an “ordinary and necessary business expense.” If the business just has its name and lo”
“I am the treasurer for a small nonprofit that files a 990N, however 2025 was our first year and we still have not been added to the IRS 990N database. Whenever I try to efile our EIN it says it doesn’t exist in their records. I have verified we are listed as a TEO on publication 78, and whenever I call the IRS nonprofit line I get a message to call back later. Does anybody have any advice with reaching a human or otherwise getting the 990 postcard filed? I have been trying since March with no lu”
“Looking for some real-world perspective from other nonprofit finance/accounting folks on this. I keep running into the same situation: a donor sends a gift, calls it a "grant" in the check memo or the cover letter, but when I actually read what they've sent, there's no restriction on how the funds can be used, and the donor never asks for a report, an accounting, or any follow-up on how the money was spent. No conditions, no periodic reporting requirement, nothing. Even so, my”
“I mean I also asked the r/tax for other opinions since the CPA obviously didn’t question why a college student was getting a 1099 for a dental office lol”
“That can carry risk as well. If they are audited and found that they do not meet the requirements if an independent contractor, they can force them to be reclassified as a an employee with fines and penalties as well as pay all of the necessary taxes. Typically, anyone going from employee to 1099 independent contractor status will be heavily scrutinized during an audit.”
“Start here: https://www.irs.gov/individuals/irs-tax-volunteers or here: https://www.aarp.org/aarp-foundation/get-involved/tax-aide.html . The first link is for the IRS VITA (Volunteer Income Tax Assistance) program, and the second is for AARP's TaxAide program.”
“We did self filing, received GC last month. It was a long journey. For some discretion, I am not going to more specific dates. But just to get an idea, It took almost one year. Approval took Six months since interview. We did everything by ourselves. NO RFE, RFIE. No overstay or unauthorized work. If you are married, planning to file AOS, then first suggestion will be, spend time to gather evidence. Don't send half baked cake. Document ur relationahip, spend time. U don't need to fancy i”
Yeah the annual fees were the part I didn’t expect either.
“If you plan on giving money to charity at any point in your future, and you expect only a couple of years of these windfall gains, consider a donor advised fund or 501c3 private foundation. You can donate 20-30% of your income that year in the form of low basis stock, which allows you to (1) reduce your tax by about 40 cents for every dollar you donated and (2) avoid any capital gains you would eventually pay on the sale of the stock later or in retirement, which could work out to another 30 cen”
“I am the new president (as of last season - August 2025) of a volleyball booster club. When I agreed to accept this position, I was told that the taxes were up to date but the "tax lady thought we needed to change our designation or something." Believing that we were up to date, I set that aside to figure out later. Fast forward to this tax season, the past president contacted our board in April and told us that she received a postcard saying our 990N was due. Our treasurer stated that”
“The whole cash basis thing is weird and as a non profit auditor I see It happen so much with revenue recognition since the bookkeepers never know how to properly recognize grants and donations”
“Honestly, this is the best way to do it, the alternative is setting up general accounts and then using classes to differentiate grant income and expenses. I am also a bookkeeper for a nonprofit and we use Quickbooks.”
“We had to open a bank account specific to these funds. I agree with all that you say, and I will double check the agreement. Thank you for your repsonse.”
“They do, and I am meeting with them before I execute any changes to COA. But the client has almost 250 accounts in their COA, so I’m going to pare it down after I confirm where in the cleanup timeline the CPA would prefer I do it.”
“I agree with your disagreement. Using Classes to track functional expenses, restricted grants, events +5k is standard.”
“Most definitely create a COA that aligns with the 990. Do they have a CPA? Be careful about changing things too much. I disagree with another poster. You want classes to split between fundraising, management and programming. Use subclasses as well if needed”
“I would not recommend QBO classes at all. Best is to encode your purposes directly into the COA. As to your functional expense allocations, I'd also advise a percentage estimation method based on salaries, and dedicated encoding into the COA.”
“Yup, glad to know I’m on the right track. Sounds like I should avoid using products/services as they may not help as much. I read that matching the COA to what’s on the 990 form is a good idea. Do you ever use categories or tags to streamline any tracking practices?”
Your own trusts and estates lawyer should be able to do them.
“There are different variations of 1099. Did the training program indicate whether they will be issuing a 1099-NEC or a 1099-MISC? Both must be reported as income but the 1099-MISC (other income) is subject only to income tax, while 1099-NEC (non-employee compensation) is subject to both income tax and self-employment tax. This seems like a bit of a grey area because if you're in a job training program, you're not really being paid for work/services you're doing; presumably you're”