Which form
What "gross receipts normally $50,000 or less" means, with examples
Your organization can file Form 990-N if its gross receipts are normally $50,000 or less. Gross receipts are everything you took in, before expenses. "Normally" is an average that depends on your organization's age, so a group can have one year above $50,000 and still file the e-Postcard.
What counts as gross receipts?
The IRS definition is short: gross receipts are "the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses" (IRS).
The words that trip people up are without subtracting. If your group sells $30,000 of fundraiser merchandise and pays the supplier $18,000, your gross receipts from that fundraiser are $30,000, not the $12,000 you kept.
What does "normally" mean?
It's an average, worked out one of three ways depending on how long your organization has existed (IRS):
| How old your organization is | Gross receipts are "normally $50,000 or less" if… |
|---|---|
| 1 year or less | It received, or donors pledged to give, $75,000 or less in its first tax year |
| Between 1 and 3 years | It averaged $60,000 or less over its first two tax years |
| At least 3 years | It averaged $50,000 or less over the last three tax years, including the year you're filing for |
Worked examples
A new organization. In its first tax year a new booster club collects $52,000 and has $15,000 more in pledges: $67,000 in all. That's $75,000 or less, so it can file the 990-N.
A two-year-old organization. Its first two years brought in $40,000 and $75,000. The average is $57,500, which is $60,000 or less, so it can file the 990-N, even though one year was well over $50,000.
An established organization with one big year. Over the last three years (this year included) it took in $62,000, $45,000 and $38,000. The average is $48,333, which is $50,000 or less, so it can still file the 990-N.
An established organization that has outgrown it. Over the last three years it took in $70,000, $55,000 and $40,000. The average is $55,000, more than $50,000, so it files Form 990-EZ (or 990) instead. See 990-N vs 990-EZ.
How to work out your own number
- Find your total receipts for each year. Use your treasurer's reports or bank records: dues, donations, grants, fundraiser sales, event tickets, interest, everything that came in.
- Don't subtract expenses. Not the cost of goods, not event costs.
- Pick the test for your organization's age from the table above.
- Average the years the test asks for, and compare.
If the result is close to the line, or your records are incomplete, it's worth asking an accountant before you file.
What if we're over?
Then your annual return is Form 990-EZ if gross receipts are under $200,000 and total assets are under $500,000, or the full Form 990 above either of those (IRS). The 990-EZ can carry late-filing penalties, so don't let it slide. Late e-Postcards have none.